Reference no: EM132537643

Questions -

Q1. ERA Corporation is engaged in the sale of goods and services with net sales/net revenue of P200,000 and P100,000 respectively. The total entertainment, amusement and recreation expense for the taxable quarter is P3,000.

How much is the amount of the deductible entertainment, amusement and recreation expenses?

A. P3,000

B. P2,000

C. P1,500

D. P1,000

Q2. AJD Corporation used the accrual basis of accounting from the year it was organized. On March 1, 2011 it purchased an equipment for P1,120,000, VAT inclusive. The equipment was estimated to have a life of 5 years. The equipment was financed through a one-year loan with Banco de Plata with interest at the rate of 18% per annum beginning January 16, 2011, which was discounted in full. During the same year, the corporation also paid interest on business-related taxes amounting to P50,000.

In 2011, AJD had interest income from its bank deposit in the amount of P100,000. AJD decided to expense outright the interest incurred to acquire the equipment.

How much was the deductible interest?

A. P243,200

B. P210,200

C. P193,200

D. P160,200

Q3. In 2011, CPL Corporation, domestic, had net income P200,000 from within the Philippines and P300,000 from the USA. The income tax paid on income from USA was P110,000.

How much was the allowable tax credit on income tax paid to the US Government using 30% tax rate?

A. P150,000

B. P110,000

C. P90,000

D. P60,000

Q4. On July 1, 2010, a Certified Public Accountant purchased for P500,000 an automobile, which will be used exclusively for his practice. He deducted annual depreciation on the basis of an estimated useful life of five (5) years. On July 1, 2012, the automobile was partially damaged in an accidental collision with another automobile. The fair market value of the vehicle was P200,000 immediately before the collision and P100,000 immediately after the collision. The taxpayer received insurance proceeds of P70,000 to cover the loss. How much is the deductible loss?

A. P200,000

B. P100,000

C. P130,000

D. P30,000

Q5. Jey Manufacturing Company bought a piece of land as well as the old building erected on it. In the Deed of Sale, the land has an allocated price of P2,000,000 and the building, P500,000. The building was immediately demolished to give way to the construction of a factory. The cost of the removal was P25,000 and the proceeds from sale of scrap amounted to P10,000. How much was the deductible loss?

A. P515,000

B. P500,000

C. P490,000

D. None