Professional Documents
Culture Documents
AY 2018-2019
Submitted by:
Viray, Renzo Q.
Submitted to:
SALES
The Sales have no adjustment in Income Statement. The total amount of Sales is
1,421,093,918 pesos. But the Sale of land, sales of shares are subjected to DST which are included in
computation of Schedule of Taxes and Licenses.
COST OF SALES
There’s no adjustment in Cost of Sales. The total amount of unadjusted Cost of sales is the
total amount also in adjusted Cost of sales.
RENTAL
The amount in the official receipts of rent is only 1,500,000. It should be actual rent for the
year, not based on PAS 17.
The Bureau of Internal Revenue rules that if the company uses Itemized deduction, it should
be supported by any supporting document and it should be correct in name of the business, tin,
address ,etc. In this problem, incorrect name included in OR.
ADVERTSING
The Bureau of Internal Revenue rules that if the company uses Itemized deduction, it should
be supported by any supporting document and it should be correct in name of the business, tin ,
address ,etc. In this problem, incorrect name included in OR.
The Bureau of Internal Revenue rules that if the company uses Itemized deduction, it should
be supported by any supporting document and it should be correct in name of the business, tin ,
address ,etc. In this problem, incorrect name included in OR
.
FUEL AND OIL
The Bureau of Internal Revenue rules that if the company uses Itemized deduction, it should
be supported by any supporting document and it should be correct in name of the business, tin ,
address ,etc. In this problem, incorrect name included in OR.
SECURITY SERVICES
The Bureau of Internal Revenue allows only sales invoice in Seller of goods and official
receipts in Seller of services. In this problem, the company has Non-VAT acknowledgement receipts
after Mabuhay Coatings LTD.
The Bureau of Internal Revenue rule provides for the following limitations on deductible
representation and entertainment to be 1% of gross receipts for the seller of services.
The Mabuhay Coatings LTD. has interest income subjected to 20% final tax and at the same
time incurred an interest expense during the taxable year, the interest expense shall be reduced by
thirty-three percent (33%).
Losses
The loss for provision for inventory losses will not be included in the deductible from gross
business income because it does not met the requisites. The casualty losses are deductible.
It does not meet the requisites for doubtful accounts to be allowed as deductible from gross
income. The doubtful account is just a provision.
Depreciation
There will be no adjustments for depreciation because it is allowed as a deduction from gross
income to enable taxpayers to recover the acquisition cost of the property used in the practice of
profession, business or trade.
Charitable Contributions
The law specified that the contributions for Education, Health, Youth and Sports
Development, Human Settlements, Science and Culture and Economic Development shall be
deductible as full amount.
Pension Trusts
The allowable deduction as pension trust is equal to the provision for the payment of
reasonable pensions to employees(based on the normal or actuarian valuation) or actual contribution
to the plan whichever is lower, and the excess of actual contribution over the actuarian valuation is to
be amortized over the period of 10 years.
Amortization of Goodwill
For the purposes of valuing a company on the basis of earnings, amortization of goodwill is
simply not an expense. In this sense, amortization of goodwill is not allowable deduction.
In this case, this is not an allowable deduction because it does not have supporting
documents.
It is allowed as deduction from gross income because the claim was written off within the
taxable year.
Any foreign exchange gain or loss from a functional currency transaction is separate from the
gain or loss in the underlying transaction, and is treated as an ordinary gain or loss; it is not
characterized as interest income or expenses.
Exempt from tax. The tax is already going to be deducted by the company distributing the
cash dividend. The dividend income we’ll then receive is the income net of taxes.
Foreign currency exchange (FOREX) gains/losses from collection of receivables and payment
of liabilities are considered realized and are considered taxable gains/deductible losses since these are
considered completed transactions.
Interest income
These interests income on deposits made in banking institutions are passive income which is
subjected to final tax.
The original issue by a corporation of its shares of stock at more or less than the par value or
stated value shall have no recognition of gain or loss. Hence, it is not subject to capital gains tax.