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    TEAM C Activity

    Uploaded by

    Patrick Medina
    The document contains details of three problems involving tax computations and financial calculations. For Problem 1, it calculates the net taxable compensation income for Ms. D prior to and after the TRAIN law. For Problem 2, it calculates the depreciation expense for 2021 and 2022 for various assets using the straight-line method. For Problem 3, it calculates the allowable EAR deduction, deductible interest expense, and depreciation expense for PMB Corporation to determine its taxable income.

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    TEAM C Activity

    Uploaded by

    Patrick Medina
    26 views7 pages
    The document contains details of three problems involving tax computations and financial calculations. For Problem 1, it calculates the net taxable compensation income for Ms. D prior to and after the TRAIN law. For Problem 2, it calculates the depreciation expense for 2021 and 2022 for various assets using the straight-line method. For Problem 3, it calculates the allowable EAR deduction, deductible interest expense, and depreciation expense for PMB Corporation to determine its taxable income.

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    TEAM-C-Activity

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    The document contains details of three problems involving tax computations and financial calculations. For Problem 1, it calculates the net taxable compensation income for Ms. D prior to and after the TRAIN law. For Problem 2, it calculates the depreciation expense for 2021 and 2022 for various assets using the straight-line method. For Problem 3, it calculates the allowable EAR deduction, deductible interest expense, and depreciation expense for PMB Corporation to determine its taxable income.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    26 views7 pages

    TEAM C Activity

    Uploaded by

    Patrick Medina
    The document contains details of three problems involving tax computations and financial calculations. For Problem 1, it calculates the net taxable compensation income for Ms. D prior to and after the TRAIN law. For Problem 2, it calculates the depreciation expense for 2021 and 2022 for various assets using the straight-line method. For Problem 3, it calculates the allowable EAR deduction, deductible interest expense, and depreciation expense for PMB Corporation to determine its taxable income.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 7

    ACTIVITY

    4/7/2022

    TEAM C
    Aljon Patrick A. Medina

    BSBA FM2B

    PROBLEM 1
    Ms. D has the following details during the year:

    Monthly basic salary 30,000.00


    Midyear bonus 25,000.00
    13th Month pay 30,000.00
    Productivity Bonus received during the year 26,000.00
    SSS Monthly Contribution 1,000.00
    Philhealth insurance Monthly contribution 100.00
    Housing Development and Mutual Fund (HDMF) Monthly Contribution 200.00
    Monthly premiums paid on health and hospitalization insurance 3,000.00
    Personal, family and living expenses 230,000.00

    TEAM C – Compute the net taxable compensation income for the year if Ms. D’s Midyear
    bonus is P28,000 and Productivity bonus received during the year is P33,000 is a
    resident citizen
    Prior to Train Law
    Monthly Basic Salary (P30,000 x 12) P360,000.00
    Midyear Bonus 28,000.00
    13th Month Pay 30,000.00
    Productivity Bonus received during the year 33,000.00
    Total Compensation Income P451,000.00

    Less: Non-Taxable Compensation


    Midyear bonus 28,000.00
    13th Month Pay 30,000.00
    Productivity bonus 33,000.00
    Total Bonuses and Other Benefits P91,000.00
    Threshold Limit P90,000.00
    (P1,000.00)
    Compensation income subject to tax (Taxable Compensation)
    P450,000.00
    Less: Mandatory Deductions (Exemptions from Tax)
    SSS Monthly Contribution P1,000.00
    Philhealth Insurance Monthly Contribution 100.00
    HDMF Monthly Contribution 200.00
    Total Mandatory Contributions P1,300.00
    Multiplied: Number of Months 12
    Total Annual Contributions P15,600.00
    (P15,600.00)
    Less: Personal Exemption. P 50,000.00. (50,000.00)
    Net Taxable Compensation Income P384,400

    Train Law
    Monthly Basic Salary (P30,000 x 12) P360,000.00
    Midyear Bonus 28,000.00
    13th Month Pay 30,000.00
    Productivity Bonus received during the year 33,000.00
    Total Compensation Income P451,000.00
    Less: Non-Taxable Compensation
    Midyear bonus 28,000.00
    13th Month Pay 30,000.00
    Productivity bonus 33,000.00
    Total Bonuses and Other Benefits P91,000.00
    Threshold Limit P90,000.00
    (P1,000.00)
    Compensation income subject to tax (Taxable Compensation)
    P450,000.00
    Net Taxable Compensation Income P
    450,000.00

    PROBLEM 2
    ENG Corp. has the following assets for the year 2021

    Asset Type Cost Useful life Date of Acquisition

    Cargo Truck P 5,800,000.00 10 Jan 18


    Delivery Vehicle P 3,200,000.00 8 Dec 19

    Laptop P 65,000.00 5 Jan 20


    Baking Oven P 47,000.00 3 Jan 20
    TEAM C – Compute for the total Depreciation Expense for the years 2021 and 2022 if the
    entity is using Straight Line Method

    Year 2021 Year 2022

    Asset Type Depreciation Asset Type Depreciation


    Expense Expense
    Cargo Truck P 580,000.00 Cargo Truck P 580,000.00

    Delivery Vehicle P 400,000.00 Delivery Vehicle P 400,000.00


    Laptop P 13,000.00 Laptop P 13,000.00

    Baking Oven P 15,666.67 Baking Oven P 15,666.67


    Total P 1,008,666.67 Total P 1,008,666.67

    * Using the straight-line method, every year of an asset's useful life, the same amount of
    depreciation is taken from its value.

    Formula: Depreciation Expense = cost/useful life


    Solution:

    2021
    Cargo Truck
    Depreciation Expense = cost/useful life
    = 5,800,000/10
    Depreciation Expense = 580,000

    Delivery Vehicle
    Depreciation Expense = cost/useful life
    = 3,200,000/8
    Depreciation Expense = 400,000
    Laptop
    Depreciation Expense = cost/useful life
    = 65,000/5
    Depreciation Expense = 13,000

    Baking Oven
    Depreciation Expense = cost/useful life
    = 47,000/3
    Depreciation Expense = 15,666.67

    2022
    Cargo Truck
    5,800,000 – 580,000 = 5,220,000 cost of cargo truck in 2022
    Depreciation Expense = cost/useful life
    = 5,220,000/9
    Depreciation Expense = 580,000
    Delivery Vehicle
    3,200,000 – 400,000 = 2,800,000 cost of delivery vehicle in 2022
    Depreciation Expense = cost/useful life
    = 2,800,000/7
    Depreciation Expense = 400,000
    Laptop
    65,000 – 13,000 = 52,000 cost of laptop in 2022
    Depreciation Expense = cost/useful life
    = 52,000/4
    Depreciation Expense = 13,000
    Baking Oven
    47,000 – 15,666.67 = 31,333.33 cost of delivery vehicle in 2022
    Depreciation Expense = cost/useful life
    = 31,333.33/2
    Depreciation Expense = 15,666.67

    PROBLEM 3

    PMB CORPORATION

    Net Sales P5,430,000.00


    Salaries and Wages 2,398,000.00
    Travel Expenses made by the president of the Corp for his
    birthday 150,000.00
    Travel Expenses by employees in line with the business 25,000.00
    Monthly Rent Expense 60,000.00
    Entertainment and Amusement P179,000.00
    Less: EAR deduction 27,150.00
    Net Entertainment and Amusement P151,850.00
    Interest on Loans by the Corp P43,000.00
    Less: Deductible Interest 28,810.00
    Net Interest on Loans by the Corp P14,190.00
    Income tax expense paid during the year 92,000.00
    P2,100,000.0
    Entity’s property, plant and equipment
    0
    Less: Depreciation Expense 420,000.00
    Net property, plant and equipment P1,680,000.00

    P10,001,040.0
    Taxable Income 0

    ALLOWABLE EAR DEDUCTION


    Sale of Goods
    Net Sales = P 5,430,000.00
    Actual Entertainment and Amusement = P 179,000.00

    Allowable EAR Deduction = Net Sales x ½ x 1%


    = 5,430,000.00 x ½ x 0.01
    = 2,715,000.00 x .01
    Allowable EAR Deduction = P 27,150.00

    DEDUCTIBLE INTEREST
    Interest Expense (from loans) P 43,000.00
    Less: (P43,000.00 x 33%) 14,190.00
    Deductible interest P 28,810.00

    DEPRECIATION EXPENSE
    Cost = P 2,100,000.00
    Useful Life = 5 years

    Depreciation Expense = Cost


    Useful Life
    = 2,100,000.00
    5
    Depreciation Expense = P 420,000.00

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