CPAR for PSBA Integ Corporation Tx03 PDF

lOMoARcPSD|48037184 CPAR for PSBA Integ Corporation Tx03 with answers and solution Accountancy (STI College) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university...

lOMoARcPSD|48037184 CPAR for PSBA Integ Corporation Tx03 with answers and solution Accountancy (STI College) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by Rittici Colie M. Pepito ([email protected])  lOMoARcPSD|48037184 CPA REVIEW SCHOOL OF THE PHILIPPINES For PSBA Integrated Review CORPORATION 1. ABC, a corporation registered in Norway, has a 50MW electric power plant in San Jose, Batangas. Aside from ABC's income from its power plant, which among the following is NOT considered as part of its income from sources within the Philippines? a. Gains from the sale to an Ilocos Norte power plant of generator bought from the United States. b. Interests earned on its dollar deposits in a Philippine bank under the Expanded Foreign Currency Deposit System. c. Gain from the sale, in London, of shares of stock and other securities of San Miguel Corporation, a domestic corporation. d. Royalties from the use in Brazil of generator sets designed in the Philippines by its engineers. 2. Aplets Corporation is registered under the laws of the Virgin Islands. It has extensive operations in Southeast Asia. In the Philippines, its products are imported and sold at a mark-up by its exclusive distributor, Kim's Trading, Inc. The BIR compiled a record of all the imports of Kim from Aplets and imposed a tax on Aplets's net income derived from its exports to Kim. Is the BIR correct? a. Yes. Aplets is a non-resident foreign corporation engaged in trade or business in the Philippines. b. No. The tax should have been computed on the basis of gross revenues and not net income. c. No. Aplets is a non-resident foreign corporation not engaged in trade or business in the Philippines. d. Yes, Aplets is doing business in the Philippines through its exclusive distributor Kim's Trading Inc. 3. ABC Inc., a corporation registered and holding office in Australia, not operating in the Philippines, may be subject to Philippine income taxation on a. Gains it derived from sale in Australia of an ore crusher it bought from the Philippines with the proceeds converted to pesos. b. Gains it derived from sale in Australia of shares of stock of Philex Mining Corporation, a Philippine corporation. c. Dividends earned from investment in a foreign corporation that derived 40% of its gross income from Philippine sources. d. Interest derived from its dollar deposits in a Philippine bank under the Expanded Foreign Currency Deposit System 4.. A corporation organized and created under the laws of a foreign country and is authorized to do business/trade in the Philippines is: a. Domestic corporation b. Resident foreign corporation c. Government owned and controlled corporation d. Non-profit hospital 5. A domestic corporation may employ, as a basis for filing its annual corporate income tax return the: a. Calendar year only c. Either calendar or fiscal year b. Fiscal year only d. Neither calendar or fiscal year Downloaded by Rittici Colie M. Pepito ([email protected])  lOMoARcPSD|48037184 6. A corporation files a quarterly return within a. 30 days after the end of each of the first 3 quarters b. 60 days after the end of each of the first 3 quarters c. 30 days, after the end of each of the first 4 quarters d. 60 days after the end of each of the first 4 quarters 7. A final or annual return is filed on or before the 15th day of the a. Month following the close of the taxable year b. 2 month following the close of the taxable year. c. 3rd month following the close of the taxable year d. 4th month following the close of the taxable year 8. One of the general principles of income taxation: a. A foreign corporation engaged in business in the Philippines is taxable on all income derived from sources within and without the Philippines. b. A foreign corporation engaged in business in the Philippines is taxable on all income derived from sources within the Philippines only c. A domestic corporation is taxable on income derived from sources within the Philippines only. d. A domestic corporation is taxable on income derived from sources without the Philippines only. 9. One of the following does not fall under the definition of a "corporation" for income tax purpose: a. General partnership b. Joint stock company c. Insurance company d. Sole proprietorship 10. Which of the following is subject to the income tax? a. A non-stock and non-profit educational institution b. Public educational institution c. Civic league or organization not organized for profit and operated exclusively for the promotion of social welfare d. Mutual savings bank and cooperative bank having a capital stock represented by shares organized and operated for mutual purposes and profit. 11. The Philippine Health Insurance Corporation (Philhealth), a government-owned corporation is: a. Exempt from the corporate income tax. b. Subject to the preferential corporate income tax for special corporations. c. Subject to the basic corporate income tax d. Subject to final tax 12. Public educational institutions, like the University of the Philippines is deemed by law: a. Subject to the preferential corporate income tax for special corporations. b. Subject to the basic corporate income tax. c. Subject to both the preferential income tax and the basic corporate income tax. d. Exempt from the corporate income tax 13. Which is not correct? The following are exempt from the corporate income tax: a. Local water districts b. Bureau of Internal Revenue Downloaded by Rittici Colie M. Pepito ([email protected])  lOMoARcPSD|48037184 c. Government owned or controlled corporation d. Social Security System 14. Which of the following may be subject to the corporate income tax? a. A non-stock and non-profit educational institution b. A public educational institution c. A private educational institution d. Government Service Insurance System 15. The improperly accumulated earnings tax shall apply to a. Publicly held corporation b. Banks and other non-bank financial intermediaries c. Insurance companies d. Closely held domestic corporations 16. Which of the following statements is not correct? a. MCIT is not applicable to resident foreign corporations. b. The corporate quarterly return shall be filed within 60 days following the close of each of the first three quarters of the taxable year. c. Resident foreign corporations would be taxed on net income from within the Philippines only. d. Non-resident foreign corporations are taxed on gross income from within the Philippines only. 17. The following income are subject to final tax, except a. Royalty income received by a domestic corporation from a domestic corporation. b. Cash dividends received by a non-resident foreign corporation from a domestic corporation c. Cash dividends received by a domestic corporation from a domestic corporation. d. Interest income from a Peso deposit received by resident foreign corporation from a Philippine bank. e. Branch profit remitted by a branch to the head office of a resident foreign corporation. 18. The MCIT shall not apply to the following resident foreign corporations, except a. RFC engaged in business as international carrier subject to 2 1/2 % of their Gross Philippine Billings b. RFC engaged in business as Offshore Banking Units on their income from foreign currency transactions with local commercial banks c. RFC engaged in business as regional operating headquarters d. RFC engaged in hotel, motel and resort operations 19. The president, upon recommendation of the Secretary of Finance, may allow corporations the option to be taxed at 15% of gross income, after the following conditions, except one, have been satisfied. Which is the exception? a. A tax effort ratio of 20% of Gross National Product (GNP) b. A ratio of 20% of income tax collection to total tax revenue c. A vat tax effort of 4% of GNP d. A 0.9% ratio of consolidated public sector financial position to GNP 20. Which of the following is not correct? The 15% gross income tax a. Is optional to a qualified corporation b. Is available if the ratio of cost of sales to gross sales or receipts from all sources does not exceed 55% Downloaded by Rittici Colie M. Pepito ([email protected])  lOMoARcPSD|48037184 c. Shall be irrevocable for three consecutive taxable years that the corporation is qualified under the scheme d. Is compared with the normal income tax and minimum corporate income tax, and whichever is the highest shall be paid. 21. If the gross income from unrelated activity exceeds 50% of the total gross income derived by any private educational institution, the tax rate shall be the regular 30% based on the entire taxable income. This is known as the a. Constructive receipt b. Tax benefit rule c. End trust doctrine d. Predominance test 22. For income taxation purposes, the term “corporation" excludes one of the following: a. Ordinary partnership b. An incorporated business organization c. General professional partnership d. Business partnership 23. A domestic corporation's record show: Quarter Normal MCIT per Taxes Excess Excess Income Tax Quarter Withheld MCIT Prior Withholdi per Quarter per Year ng Quarter Tax Prior Year First P100,000 P80,000 P20,000 P30,000 P10,000 Second 120,000 250,000 30,000 Third 250,000 100,000 40,000 Fourth 200,000 100,000 35,000 The income tax due and income tax payable, respectively, for the first quarter are a. P100,000; P100,000 b. P100,000; P80,000 c. P100,000; P50,000 d. P100,000; P40,000 24. The income tax due and income tax payable, respectively, for the second quarter are a. P330,000; P 120,000 b. P330,000; P 250,000 c. P330,000; P 150,000 d. P330,000; P 230,000 25. The income tax due and income tax payable, respectively, for the third quarter are a. P470,000; P 250,000 b. P470,000; P 100,000 c. P470,000; P 140,000 d. P470,000; P 70,000 26. The income tax due and income tax payable, respectively, for the year are a. P670,000; P 200,000 b. P670,000; P 100,000 Downloaded by Rittici Colie M. Pepito ([email protected])  lOMoARcPSD|48037184 c. P670,000; P 135,000 d. P670,000; P 165,000 1st 2nd 3rd 4th Net Income Tax 100,000 220,000 470,000 670,000 Minimum Corporate Income Tax 80,000 330,000 430,000 530,000 Tax due(higher) 23.100,00 24.330,00 25.470,00 26.670,00 0 0 0 0 Excess, withholding tax prior year (10,000) (10,000) (10,000) (10,000) Taxes withheld prior quarter (20,000) (50,000) (90,000) Taxes withheld current quarter (20,000) (30,000) (40,000) (35,000) Tax payment prior quarter (40,000) (270,000) (340,000) Excess MCIT prior year (30,000) (30,000) (30,000) Income tax payable 23. 40,000 23.230,00 25. 70,000 26.165,00 0 0 27. Using the preceding problem except that the normal income tax for the fourth quarter is P50,000 (instead of P200,000), the income tax still due for the year is a. P 120,000 b. P 55,000 c. P 45,000 d. P 75,000 Net Income Tax 520,000 Minimum Corporate Income Tax 530,000 Tax due(higher) 530,000 Excess, withholding tax prior year (10,000) Taxes withheld prior quarter (90,000) Taxes withheld current quarter (35,000) Tax payment prior quarter (340,000) Excess MCIT prior year Income tax payable 55,000 28. CPA University, a proprietary educational institution organized in 2006, had the following data for 2018. Tuition Fees P 850,000 Rental Income (net of 5% cwt) 142,500 School related expenses 820,000 The income tax still due for 2018 is a. P 54,000 b. P 10,500 c. P 18.000 d. P 46,500 142,500÷ 95 % Pre-dominance test =15 % 850,000+(142,500 ÷ 95 %) Note: Income from unrelated business does not exceed 50% Tuition fees 850,000 Rental income (142,500 ÷ 95 %) 150,000 Gross income 1,000,000 Additional deduction: school related expenses (820,000) Taxable income 180,000 Tax rate 10% Income tax due 18,000 Tax credit (7,500) Income tax still due 10,500 Downloaded by Rittici Colie M. Pepito ([email protected])  lOMoARcPSD|48037184 29. CPA College, a proprietary educational institution organized in 2006, had the following data for 2018. P 480,000 494,000 945,000 Tuition Fees Rental Income (net of 5% cwt) School related expenses The income tax still due for 2018 is a. P 16,500 b. (P 9,500) c. (P6,000) d. P20,000 Tuition fees 480,000 Rental income (494,0 00 ÷ 95 %) 520,000 Gross income 1,000,000 Additional deduction: school related expenses (945,000) Taxable income 55,000 Tax rate 30% Income tax due 16,500 MCIT (1,000,000x2%) 20,000 Income tax due (higher) 20,000 Tax credit (520,000x5%) (26,500) Income tax still due (6,500) 30. CPA Airlines, a resident foreign international carrier has the following records of income for the period. (The income represents gross billings.) a. Continuous flight from Manila to Tokyo = 1,000 tickets at P2,000 per ticket b. Flight from Manila to Taipei; transfer flight (on CPAR Airlines) from Taipei to Tokyo = 2,000 tickets at P2,000 per ticket c. Continuous flight from Manila to Taipei = 3,000 tickets at P1,000 per ticket The income tax due is a. P225,000 b. P 125,000 c. P 100,000 d. P 175,000 a. Manila to Tokyo (1,000x2,000) 2,000,000 b. Manila to Taipei (2,000x1,000) 2,000,000 c. Manila to Taipei (3,000x1,000) 3,000,000 Gross Philippine billings 7,000,000 Tax rate 2.5% Income tax due 175,000 31-40. The A Corporation provided the following data for the calendar year ending December 31, 2018 (S 1 = P50) Philippines U.S.A. Gross Income P4,000,000 $40,000 Deductions P2,500,000 $15,000 Income Tax Paid $ 3,000 31. If it is a domestic corporation, its income tax after tax credit is a. P 812,500 b. P 675,000 c. P 962,500 Downloaded by Rittici Colie M. Pepito ([email protected])  lOMoARcPSD|48037184 d. P 480,000 Gross income - PH 4,000,000 Gross income – USA (40,000x50) 2,000,000 Total gross income 6,000,000 Deductions: PH 2,500,000 USA (15,000x50) 750,000 (3,250,000) Taxable income 2,750,000 Tax rate 30% Income tax 825,000 Tax credit (3,000x50) (150,000) Income tax after tax credit 675,000 32. If it is a resident foreign corporation, its income tax is a. P 730,000 b. P 450,000 c. P 480,000 d. P 525,000 Gross income - PH 4,000,000 Deductions: PH 2,500,000 Taxable income 1,500,000 Tax rate 30% Income tax 450,000 33. If it is a non-resident foreign corporation, its income tax is a. P730,000 b. P 1,280,000 c. P1,200,000 (4,000,000x30%) d. P 1,400,000 34. Under No. 31, but it opts to claim the tax paid abroad as deduction from gross income, its income tax is a. P910,000 c. P237,000 b. P832,000 d. P780,000 Gross income - PH 4,000,000 Gross income – USA (40,000x50) 2,000,000 Total gross income 6,000,000 Deductions: PH 2,500,000 USA (15,000x50) 750,000 (3,250,000) Taxable income 2,750,000 Tax paid (150,000) Taxable income 2,600,000 Tax rate 30% Income tax 780,000 35. If it is a resident international carrier, its income tax is a. P100,000 (4,000,000x2.5%) c. P 37,000 b. P 10,000 d. P125,000 36. If it is a non-resident cinematographic film owner/lessor, its income tax is a. P1,000,000 (4,000,000x25%) c. P300,000 b. P 100,000 d. P128,000 Downloaded by Rittici Colie M. Pepito ([email protected])  lOMoARcPSD|48037184 37. If it is a non-resident lessor of vessels, its income tax is a. P100,000 c. P300,000 b. P180,000 (4,000,000x4.5%) d. P128,000 38. If it is a non-resident lessor of aircrafts, machineries and equipment, its income tax is a. P100,000 c. P300,000 (4,000,000x7.5%) b. P180,000 d. P128,000 39. If it is a resident foreign corporation but its expenses within and outside the Philippines is P3m, unallocated (disregard original data on expense) its income tax is a. P640,000 b. P700,000 c. P480,000 d. P600,000 Gross income - PH 4,000,000 Expenses: PH (3,000,000x4,000,000÷6,000,000) (2,000,000) Taxable income 2,000,000 Tax rate 30% Income tax 600,000 40. If it is a resident foreign corporation and it remitted 60% of its net profit to its head office abroad, its total income tax liability is (Original data) a. P480,000 b. P571,800 c. P544,500 d. P612,750 Gross income - PH 4,000,000 Deductions: PH 2,500,000 Taxable income 1,500,000 Tax rate 30% Income tax 450,000 Profit remittance tax (1,500,000-450,000)x60%x15% 94,500 Total tax liability 544,500 41. A Corporation, a resident foreign corporation, provided the following data for taxable year 2018: Philippines USA Gross Income P40M P20M Dividend from: Domestic corporation 4M Foreign corporation (100% of its business is in the Phils.) 5M Business expenses 12M 8M The corporation remitted to its head office the PSM dividend income and 40% of its net profit to its head office in USA. The corporation's total tax liability including the tax on the profit remitted is a. P10,240,000 c. P12,960,000 b. P12,448.000 d. P10,944,000 Gross income – PH 40,000,000 Dividend from foreign corp. 4,000,000 Downloaded by Rittici Colie M. Pepito ([email protected])  lOMoARcPSD|48037184 44,000,000 Business expenses (12,000,000) Taxable income 32,000,000 Tax rate 30% Income tax 9,600,000 Profit remittance tax (32,000,000x70%x40%x15%) 1,344,000 Total tax liability 10,944,000 42. A Corporation has the following data for the year 2018: Gross Income, Philippines P1,000,000 Gross income, USA 500,000 Gross income, Japan 500,000 Expenses, Philippines 300,000 Expenses, USA 200,000 Expenses, Japan 100,000 Other Income: Dividend from San Miguel Corp. 700,000 Dividend from Ford Motors, USA 120,000 Gain, sale of San Miguel shares directly to buyer 150,000 Royalties, Philippines 50,000 Royalties, USA 100,000 Interest income (other than from bank deposit) 60,000 Rent, land in USA 250,000 Other rental income (Phils.) 100,000 Prize, contest in Manila 200,000 Interest income (S deposit in BDO 50,000 The total tax liability as a domestic corporation is: a. P709,000 c. P679,750 b. P692,750 d. None of the above Gross income – PH 1,000,000 Gross income – USA 500,000 Gross income – Japan 500,000 Dividend from Ford Motors, USA 120,000 Royalties, USA 100,000 Interest income (other than from bank deposit) 60,000 Rent, land in USA 250,000 Other rental income – PH 100,000 Prize, contest in Manila 200,000 Total gross income 2,830,000 Additional deduction: Expenses – PH 300,000 Expenses – USA 200,000 Expenses – Japan 100,000 (600,000) Total taxable income 2,230,000 Tax rate 30% Income tax 669,000 Final tax – II EFCDS (50,000x15%) 7,500 Final tax – Royalties, PH (50,000x20%) 10,000 CGT – gain on sale of shares (150,000x15%) 22,500 Total tax liability 709,000 Downloaded by Rittici Colie M. Pepito ([email protected])  lOMoARcPSD|48037184. 43. Based on the above problem, its total tax liability if it is resident foreign corporation is a. P318,000 c. P328,750 b. P341,750 d. None of the above. Gross income – PH 1,000,000 Interest income (other than from bank deposit) 60,000 Other rental income – PH 100,000 Prize, contest in Manila 200,000 Total gross income 1,360,000 Additional deduction: Expenses – PH (300,000) Total taxable income 1,060,000 Tax rate 30% Income tax 318,000 Final tax – II EFCDS (50,000x7.5%) 3,750 Final tax – Royalties, PH (50,000x20%) 10,000 CGT – gain on sale of shares (100,000x5%) 5,000 CGT – gain on sale of shares (50,000x10%) 5,000 Total tax liability 341,750 44. And if it is a non-resident foreign corporation, its total tax liability is a. P433,500 c. P338,500 b. P443,500 d. None of the above Gross income – PH 1,000,000 Interest income (other than from bank deposit) 60,000 Other rental income – PH 100,000 Prize, contest in Manila 200,000 Total gross income 1,360,000 Tax rate 30% Income tax 408,000 Final tax – Dividend from San Miguel (70,000x15%) 10,500 Final tax – Royalties, PH (50,000x30%) 15,000 CGT – gain on sale of shares (100,000x5%) 5,000 CGT – gain on sale of shares (50,000x10%) 5,000 Total tax liability 443,500 45. Any income from transactions with depository banks under the expanded foreign currency deposit system shall be exempt from income tax if derived by a a. Domestic corporation b. Resident foreign corporation c. Non-resident foreign corporation d. Resident alien 46. Selected cumulative balances were taken from the record of ABC Co., a domestic corporation, in its fifth year of operations in 2018, which had an income tax refundable of P10,000 for the preceding year for which there is a tax credit: Q1 Q2 Q3 Q4 Gross profit from sale P800,000 P1,600,000 P3,100,000 P3,000,000 Capital gain on sale 50,000 50,000 100,000 100,000 Downloaded by Rittici Colie M. Pepito ([email protected])  lOMoARcPSD|48037184 directly to buyer of shares of domain Dividend from domestic 10,000 10,000 20,000 20,000 corporation Interest income on 5,000 10,000 20,000 20,000 Philippine Peso bank Business expenses 600,000 1,200,000 2,100,000 2,100,000 Income tax withheld 15,000 35,000 115,000 115,000 The income tax due and the income tax payable, respectively, at the end of first quarter a. P16,000; P35,000 b. P60.000; P60,000 c. P60,000; P35,000 d. P16.000; P16,000 47. The income tax due and income tax payable, respectively, at the end of second quarter a. P120,000; P75,000 b. P120,000; P85.000 c. P120,000; P40,000 d. P85,000; P85,000 48. The income tax due and income tax payable, respectively, at the end of third quarter a. P210,000; P135,000 b. P210,000; P60,000 c. P48,000; (P102,000) d. P48,000; (P38,000) 49. The income tax due and income tax payable, respectively, at the end of the year a. P300,000; P52,000 b. P300,000; P30,000 c. P300,000; P260,000 d. P300,000; P40,000 1st 2nd 3rd Annual Gross profit 800,000 1,600,000 2,400,000 3,100,000 Business expenses (600,000) (1,200,000 (1,750,000 (2,100,000 ) ) ) Taxable income 200,000 400,000 700,000 1,000,000 Tax rate 30% 30% 30% 30% Income tax due 46. 60,000 47.120,000 48.210,000 49.300,000 Tax credit, prior year (10,000) (10,000) (10,000) (10,000) Tax withheld (15,000) (35,000) (65,000) (115,000) Tax payment (35,000) (75,000) (135,000) Income tax payable 46. 35,000 47.40,000 48. 60,000 49.40,000 50. A domestic corporation has the following data for 2018: Excess MCIT 2017 - P10,000 Downloaded by Rittici Colie M. Pepito ([email protected])  lOMoARcPSD|48037184 Q1 Q2 Income, net of 1% withholding tax P495,000 P792,000 Deductions 480,000 700,000 How much is the income tax still due and payable in the second quarterly return? a. P 4,000 b. P8,000 c. P9,000 d. P13,000 1st 2nd Income (495,000÷99%/792,000÷99%) 500,000 1,300,000 Deductions (480,000) (1,180,000) Taxable income 20,000 120,000 Tax rate 30% 30% Net taxable income 6,000 36,000 Minimum corporate income tax, 2% 10,000 26,000 Tax due (higher) 10,000 36,000 Tax withheld , 1% (5,000) (13,000) Tax payment (5,000) Excess, MCIT (10,000) Income tax payable 5,000 8,000 51. The record of a closely-held domestic corporation show the following data for 2018: Gross income P1,500,000 Business expenses 600,000 Gain on sale of business asset 60,000 Interest on deposits with Metrobank, net of tax 5,000 Sale of shares of stocks, not listed and traded: Selling price 150,000 Cost 115,000 Dividends from Victory Corporation, domestic 35,000 Dividends paid during the year 120,000 Reserved for building acquisition 300,000 In 2017, the corporation suffered an operating loss of P130,000. This amount was carried forward and claimed as deduction from gross income 2018. The income tax due in 2018 is a. P234.375 b. P249,000 c. P273,937 d. P288,000 Gross income 1,500,000 Gain on sale of business asset 60,000 Total gross income 1,560,000 Additional deduction: Business expenses 600,000 Operating loss 2017 130,000 (730,000) Taxable income 830,000 Tax rate 30% Tax due 2018 249,000 52. The improperly accumulated earnings tax Downloaded by Rittici Colie M. Pepito ([email protected])  lOMoARcPSD|48037184 a. P36,075 b. P34,765 c. P35,640 d. None of the above Gross income 1,500,000 Gain on sale of business asset 60,000 Total gross income 1,560,000 Additional deduction: Business expenses 600,000 Operating loss 2017 130,000 (730,000) Taxable income 830,000 Income from exempt tax 35,000 Income subject to final tax 150,000-115,000 35,000 Net operating loss carry-over 130,000 Income subject to final tax 5,000÷80% 6,250 206,250 1,036,250 Dividends actually or constructively paid (120,000) Income tax paid 249,000 Final tax (6,250x20%) 1,250 Capital gains tax (35,000x15%) 5,250 Amount that may be retained 300,000 (555,500) Improperly accumulated taxable income 360,750 Tax rate 10% Improperly accumulated earnings tax 36,075 53-57. The records of a domestic corporation organized in 2000 show: 2016 2017 2018 Gross Income P2,000,000 P3,000,000 P4,000,0 00 Other Income: Capital gain from sale of 400,000 500,0 commercial land 00 Interest income from bank 80,000 deposit 96,000 Capital gain from sale of shares 60,000 of stock- not listed 70,000 Allowance deduction 1,940,000 3,100,000 3,500,0 00 53. The income tax payable in 2016 is a. P138,000 b. P 40,000 c. P 42,000 d. P 18,000 Gross income 2,000,000 Allowable deduction (1,940,000) Taxable income 60,000 Tax rate 30% Net taxable income 18,000 Minimum corporate income tax (2,000,000 2%) 40,000 Income tax payable (higher) 40,000 54. What is the accounting entry for the excess MCIT in 2016? a) Provision for income tax Deferred charges - MCIT (2016) Income tax payable Downloaded by Rittici Colie M. Pepito ([email protected])  lOMoARcPSD|48037184 P18,000 22,000 P40,000 b) MCIT (2016) Income tax payable P18,000 P18,000 c) Income tax payable Excess MCIT (2016) Cash P40,000 P22,000 18,000 d) None of the above 55. The taxable income in 2018 is a. P400,000 b. P900,000 c. P1,000,000 d. P500,000 56. The income tax payable in 2018 is a. P150,000 b. P120.000 c. P38,000 d. P68,000 2017 2018 Gross income 3,000,000 4,000,000 Allowable deduction (3,100,000) (3,600,000) Taxable income (100,000) 55. 400,000 Tax rate 30% Net taxable income 120,000 Minimum corporate income tax 60,000 80,000 Tax due (higher) 60,000 120,000 Excess minimum corporate income tax (22,000) Tax payment (60,000) Income tax payable 2018 56. 38,000 57. What are the accounting entries to properly record the income tax payable in 2018? a. Provision for income tax P120,000 Deferred charges - MCIT (2016, 2017) P82,000 Income tax payable 38,000 b. Provision for income tax P38,000 Income tax payable P38,000 c. Income tax payable P120,000 Cash P120,000 d. None of the above 58. A calendar-year BOI-registered enterprise has the following data from its registered activity for 2018: Total sales for year P90,000,000 Cost of sales 45,000,000 Other business expenses 30,000,000 Taxable income for the year 15,000,000 Regular corporate tax rate 30% 1. If the enterprise is under the Income Tax Holiday (ITH) regime, compute the tax covered by the ITH for the entire taxable year 2018 a. P 4,500,000 (15,000,000x30%) b.P27,000,000 c.P13,500,000 d.None of the above. Downloaded by Rittici Colie M. Pepito ([email protected])  lOMoARcPSD|48037184 2. If the enterprise is a PEZA-registered and under the 5% GIT, compute the tax payable. a. P2,250,000 (90,000,000 - 45,000,000)x5% b. P2,700,000 c. P1,350,000 d. None of the above. 59. James Lustre is the manager of a PEZA-registered enterprise availing of the preferential 5% GIT in lieu of all other taxes, national or local. Besides his salary, he also receives fringe benefits which are normally subject to the fringe benefits tax (FBT). Statement 1: The manager's salary is also subject to the 5% GIT. Statement 2: The PEZA-registered enterprise is exempt from remitting the CWT on the manager's salary, and from payment of the FBT. a. Both statements are true. b. Both statements are false. c. Only Statement 1 is true. d. Only Statement 2 is true. 60. Statement 1: Once the profit has been subjected to IAET, the same shall no longer be subjected to IAET in later years even if not declared as dividend. Statement 2: Notwithstanding the imposition of IAET, profits which have been subjected to IAET, when finally declared as dividends, shall nevertheless be subject to tax on dividends imposed under the Tax Code except in those instances where the recipient is not subject thereto. Statement 3: A corporation that declared dividends within the 1-year period from the end of the taxable year being assessed is no longer liable for the IAET. a. All statements are true. b. All statements are false. c. One statement is true. d. None of the above. 61. Income payments were made by Superman Corporation (domestic) to Darna Corporation, a PEZA- registered entity under the 5% GIT Regime. The payments made were related to Darna's registered activities. Superman withheld CWT from its payments. Darna claims that no tax should have been withheld. Superman claims that withholding is proper because Darna is not under the ITH regime. Who is correct? (a) Superman is correct. Only those PEZA-registered entities under the ITH are exempt from withholding on their receipt of income. (b) Darna is correct. Under the 5% GIT regime, it is exempt from all local and national taxes (including withholding taxes on its income) and in lieu thereof, is only subject to the 5% special tax on gross income. (c) Superman loves Wonder Woman. (d) No comment. Downloaded by Rittici Colie M. Pepito ([email protected])  lOMoARcPSD|48037184 Downloaded by Rittici Colie M. Pepito ([email protected])