Reference no: EM132587681

The tax law used here is the tax law of the Philippines.

In year 2018, Mabuhay Corporation entered into a loan contract with XZY Bank. The loan principal is P1,000,000 with an annual interest rate of 12%. In addition, Mabuhay received interest income amounting to P200,000 (gross of 20% final tax).

Question 1: For income tax purposes, the allowable interest expense in 2018 is:

A. P100,000

B. P54,000

C. P66,000

D. P40,000

Recently, RL Corporation, domestic corporation, donated to the priority program of DSWD in Catarman, Northern Samar for the relief operation affected by Typhoon Tisoy. RL Corporation donated cash amounting to P400,000. RL Corp has net income before charitable contribution amounting to P5,400,000. RL Corporation has gross income amounting to P15,000,000.

Question 2: For tax purposes, what is the allowable charitable deduction from its income?

A. P400,000

B. P540,000

C. P270,000

D. P500,000

Question 3: The income tax due of RL Corporation in 2019 is?

A. P2,000,000

B. P1,500,000

C. P300,000

D. P500,000

Question 4: The minimum corporate income tax (MCIT) of RL Corporation is computed at?

A. P500,000

B. P540,000

C. P300,000

D. P270,000

Question 5: Assuming RL Corporation opted to choose OSD of 40%, the income tax due of RL Corp in 2019 is?

A. P2,700,000

B. P1,500,000

C. P2,628,000

D. P300,000