uting the MCIT, which will not form pan

_ Freight
d. Wharfage

- number, but the taxpayer isa

n
° Pr ae form part of cost of goods sold)
“Ww

Di bor
b. Direct labo
Freight & insurance

Import duties

but the taxpayet is a seller of services:

rl, ;
3, Based on numbe ost of services?

which will not form part of ¢

Salaries & supplies -

loyee benefits
Demciation & rental expenses

_ Interest expense

aos

ly effective in the 5" year following

ment 1: The MCIT is only ¢ .

| ao ar in which the corporation commenced its business.
: .

: eens 2: Non resident corporations are also covered by

a :

MCIT.
a. True, True
b. False, False

c. False, True
d. True, False,

5. Non- Resident Corporations need not file any income tax

retums.

Tax EXEMPT Corporations are also required to file an ITR

for administrative purposes only.
a. True, True
b. False, False

c. False, True
d. True, False

238

meer \

yr

as

6, To record MCIT, the account d

a. Debited ae

b. Credited

tred charges MCIT ie

¢. Memo entry only
d. No entry required
7. To record application of excess MCIT y
tax, what account is credited:
a. Income tax payable
b. Cash in bank

8. NORMAL income

C. Retained earnings

d. Deferred charges MCIT

g, To record expired portion of MCIT. what

a. Retained earnings
b. Income tax payable

account ts debited:
¢. Deferred charges MCIT
d. Provision for income tax

One of the following is . ;

, MCIT. 8 1S not accepted basis of relief from the

a. Prolonged labor dispute

b. Force majeure problems

c. Legitimate business reverse

d. Law suits filed by the company

10. Which is not a characteristics of corporate income ta

a. Progressive tax :

. c. General tax
b. Direct tax
d. National tax

11. 1* Statement: Non stock-non-profit corporation are tax-exempt i

from their income from all operations.

nd ‘ foi
2™ Statement: Intercorporate dividends are tax-exempt if the

recipient is a foreign corporation.

a. True; True c. False; True ‘
b. False; False d. True; False
239
~
x
governed by gross income taxation.
ich is 8°

i jon
a. Domestic corporatio

b. Resident corporation

. ‘on
¢ Non-resident corporatio

d. Educational institutions

f the following corporations cannot claim tax credit fo,

14. One 0

i id abroad.
foreign taxes pale * ,
a gals Educational Institutions

b. Resident International Carriers

c. Investment companies
d. Domestic Hospitals

5. 1s Statement: Foreign income tax may be treated by a corporat

° taxpayer as tax credit but not as deduction from gross income,
om aiscetee Being a holding company 1S conclusive evidence

i er accumulation of profit.
a tie True c. True; False

b. False; False d. False; True

16. The improperly accumulated earnings tax shall not apply to

the following except:
a. Insurance companies
b. Corporations formerly registered with PEZA
c. Publicly held corporations
d. Banks & Non Bank Financial Intermediaries

240

17. 1% Statement : Domestic cor

definition of closely held Poration not ¢, I

" Corporati a'ling under the
ld corporat 'ons a .
held corporations. " considered publicly

b. False, False ©. False, True

18. It is a test used in determinin

ot 2 the rea
to justify the accumulation of eam ne n
corporation from paying [AE: 88 whic

a. Urgency test
b. Reasonable needs test

ceds of a business
h will exempt the

¢- Immediacy test
d. Control test

19. The IAE tax is essentially a:

a. General tax

b. Property tax c. Regulatory or Penalty tax

d. Excise tax

20. 1* Statement: MCIT shall app!

y toallc
2™ Statement: LAET shall apply onl Orporations.
a. True, True
b. True, False

y to domestic corporation.
c. False, False

d. False, true

21. A domestic corporation provided the following data:

13 14 15 16

Gross sales P2,040,000 | 2,800,000 | 3,000,000 } 4,000,000

Sales returns 40,000 100,000

Cost of goods

sold 1,000,000 | 700,000 | 1,500,000 } 1.500,000

Business

expenses 950,000 | 2,100,000 | 1,200,000 } 1,200,000

241
The income tax du

c. P60,000

_ P15,000 d. P90,000

. P40,000

itory bank under the eXpande

ystem from foreign curtene,

22. Income derived by 4 depos

| banks, shall be subject nid

; j Ss
foreign currency deposit i
transactions with local comme

fi ‘ of:

_ Aeneid one-half percent (7 2%)

b. Twenty percent (20%)

c. Ten percent (10%)

d. Five percent (5%)

23, The following corporations are exempt from the Minimun,

Corporate Income Tax, except:

a. Non-profit hospitals

b. Proprietary educational institutions

c. Non-stock, non-profit educational institutions

d. Resident corporations
24. Which of the following is not exempted from improperly
accumulated earnings tax?
Publicly — held corporations
b, Bank and other non-bank financial intermediaries
c. Insurance companies ~
d. Resident corporation

25. Amos Corp. had P600,000 in compensation expense for book

purposes in 2016. Included in this amount was a P50,000 accrual

for 2016 non-shareholder bonuses. Amos paid the actual 2016
bonus for P60,000 on March 1, 2017. In its 2016 tax returm,

what amount should Amos deduct as compensation expens*

a. P600,000 c. P550,000
b. P610,000 d. P540,000
242

n'a

26. Aragom, Inc. had the follow,

. ING ite
Gross Receipts ™S of income and expe
xpenses:

Cost of services, salary .

OF SETVICES, Salary of perso 500,000
directly engaged in busines me
Dividends received ° 250.000
25.000

The dividends WETE Teceived from a do

general and admini . mesti
facilities cost “~ USITatE €xpenses include
Wh Supplies of P25,000 and P15 Cost of utilized
at amount should be reported as gross j 3.000, respectively.
corporate Income tax purpose? Income for minimum
a. P210,000

b. P235,000

¢ corporation. The

c. P250,000
d. P275,000

27. In 2016 Cable Corp., a calendar-

P80,000 to a qualified tnictabie Sheen contributed
net income was P820,000. In 2016, what on. Cable’s 2016
deduct as charitable contributions? amount can Cable

a. P80,000 c. P4I.006

b. P45,000 d. Pe M0

28. For the year ended December 31. 2016 Kelly Corp. had
: . had net

income per books of P300,000 bef

i ’ 0 ‘
income were the following items: re taxes. Included in the net

Dividend income from an unaffiliated

domestic taxable corporation P50,000

Bad debts expense (represents the increase 7

in the allowance for doubtful account) P80,000

What , :
31 : a Kelly’s taxable income for the year ended December
a. P170,000
c. P345,000
b. P330,000 dP

3
380,000
C Co provided the following data
{ESTIC ©°-

DOW
| 29.A 2015 2016
Gross Income "100,000 250,000

Net Income ie.

due for the taxable year 2015 is:
The income tax c. P 32,000
i 3,00 d. P40,000
b. P 72,00
em in number 29. The income tax

30, Assuming the game probl

016 is;
due for the taxable year 20118 30 gq
“ a d. P40,000
b. P65,

‘no the same problem in number 29. However the

31. Teen eats oration is a proprietary educational institution,
omes

. 016 is:
a. ’

b. P25,000 d. P40,000

32, Williams, a domestic corporation had the following data

Deductions
ble Year . Gross Income
ee ans 1,000,000 ae
2016 980,000 500,00
The income tax payable in 2015 is:
a. P 20,000 c. P380,000
d. P 100,000

b. P 0

—
33. Assuming the same problem number 32. The taxable ico

in 2016 is:
a. P 380,000 c. P 100,000
b. P 0 d. P 50,000

244

££
at?

34, Assuming the same Problem ;

payable for 2016 js," '" PUMber 32. The income tax

a. P 153,600
b. P 144,000 © P 114.609
4. P 94,600
35. The following person’, Signature

corporations income tax re

a. President

b. Vice — President

Must appe ‘
turn, eXcept: PPear in the

€. Treasurer
d. External Auditor
36. Resident international carrie

TS
billing at are taxed on gross Philippine
140
7 d. 10%

37. Non-resident lessors of aircraft

equipment are taxed on gross rent

— gr ntals, charter and other fees at

c. 7 ¥40%
b. 44% oe

38. Non-resident owner or lessor of vessels chartered by Philippine

als, lease or fees at

: ane C. 7Y%%
. 2/0

39. 1* Statement -

tem A resident corporation is allowed to deduct

depreciation ex

pense regardless of the property’s location.

2™ Statement - A private educational institution may at its option
elect either to deduct capital expenditures during the taxable
year or to deduct allowance for depreciation thereof.

a. True, False c. False, True

b. True, True d. False, False

245
yr

y} properly in Malolos, Bulacan

sold a as been classi

sok erty has been classitiog

= rap? .
. Tee vation of P1.000 per s

| gan was paid based on the zonal Value

gains set (RDO). however, refused to issue
net Ot * Reaistration for the reason that base
the Ce — property shale have e higher Zonal
on his ocular Inspe sd by the C ommissionet ose Revenye
determine a dy a commercial area. Accordingly
because the area IS ke : recomputation of the taxes die by
the RDO anted ket value appearing In a nearby bank’,
ysing the fair mar “ ractically double the existing Zonal
valuation list ee st the RDO use as the basis fo,
What va otal gains tax? . —
Zonal Values which ever is higher
Gross Selling Price which ever js

= ena tatlon
¢ oid 4 onal \
s sapital
Dist ,
Authorizing
ion the

The Revenue
artifieate

yaluate

yalue. wn
ining the

determining

a. Fair Market Values or

bp. Fair Market Values or

7 oe ket Values or Assessed Values which ever is higher.

c air.

Fair Market Values or Bank’s Valuation which ever is higher

air:

ith the preceding number, the RDO also a

donor's tax on the difference between the selling
ae base he zonal value and the fair market value
cope cae sneatby bank’s valuation list. Should the aliens
a Geman taxable value be legally subject i. rel ws
Yes. taxable value is the difference between the se
and fide market value at the time of transfer.
b. Yes, taxable value is the difference between the zona
and selling price.
c. No, there was no transfer for insufficient co
immovable are not subject to donor’s tax. _
d. No, there was a valid, perfect and consummated ©
of sale and not donation.

_Inconnection W

a.

value

nsideration of

act

246

\ a

22 Weber Realty Company Which Own

atipolo ener tien - Sa three hectare land in
: : ure e ‘

re Denn Compan © Agreement (VA) with

; ‘ { :
seen ae cap S T the development OF said
alty Wher :
the land to the Joint Venture ; Of the land contributed
develop the same into a resident; i die
residential houses thereon, They agreed th
the lots between them. Does the JVA
between Weber and Prime create 4 Separate taxable « ,
a. Yes, JVA is a taxable Corporation, | me
b. Yes, JVA is a taxable partnership
c. No, JVA is exempt from taxation.

d. No, JVA is a mere conduit.

al Subdivision and construct

at they would divide

€ntered into by and

43. Based on the preceding questions are the

distribution of the saleable lots to. Weber
income tax and to expanded withholding
a. Yes, allocation and distribution sale

income subject to withholding tax.

b. Yes, allocation and distribution saleable lots are part of the
gross income and not subject to expanded withholding tax
c. No, allocation and distribution saleable lots are exempt
income in the likings of intercorporate dividends.

d. No, allocation and distribution of saleable

venture engaged in construction projects
Income tax

allocation and
and Prime subject to
tax?

able lots are taxable

lots of a joint
are exempt from

44, Is the sale by Weber or Prime of their respective shares in the

saleable lots to third parties subject to income tax and to
expanded withholding tax?

a. Yes, the sale by Weber or Prime of their respective shares

in the saleable lots to third parties are part of the gross

income of a taxable corporation and not subject to

withholding tax.
ee”

ater ot prime of therr respectiy © sharyg

nd parties ms not part of the Bog.
inthe Sale «to expanded withholding tax. °
ncome but subyee sar it Prime of their respective Share
o third parties are both subject to incom,

7 anded withholding tax.

*\ my! Z ¥ .
and toe a Weber or Prime of their respective share,
rec to third parties are exempt from incom 4

Yes, the sales 9)

c saleable Jotst

tax
No. the sales
in the saleable lots

tar.

e within and with out the Philippines?

ational Carrier
ematographic film makers

ofit hospitals
lessors of vessel.

48. Taxable on incom

3. Resident Intem
b Non-resident cin
Non-stock; non-pr

C.
resident owners OF

d. Non-
k company that manufacturers keratonin. Its
ve distributor is Loom Industries Philippines
stos receives royalty income from sources
within the Philippines. As a Certified public Accountant, which
of the following is correct with regard to the applicable tax
impose upon the royalty income?

a. Subject to final withholding tax of 10%.

b. Subject to final withholding tax of 20%.

c. Subject to final withholding tax of 30%.

d. Subject to profit remittance tax of 15%.

46, Agustos 1s a Gree

Philippine exclusi
Incorporated. Agu

47. Zeus a Domestic Corporation has incurred Rent Expensé

amounting to Php120,000.00 Zeus paid the lessor 4 i

Php120,000.00 without withholding 5% tax there from. How
much rent expense can Zeus claim as an allowable deductions’
a. 120,000

b. 60,000

c. Zero

d. None of the above.

248

4g. CRP ts one of the Phili

49, Tan Torres a non-stock and non-profit ch

50. Ayer domestic corporation hired Velayo, Gorres

51

7 PPpines reg;
corporation. As the company’s q Bister
§ccount

account for all payments made local,

percentage of withholding t —
by top 20,000 private co
suppliers of goods?

a. 1% of the gross payments

b. 2% of the gross payments
c. 3% of the gross payments
d. 4% of the gross payments

ed top 20,000 Private

tant YOu where tasked to

esident suppliers What

ax ates of neon ments 1).

Inc 1e pe
ie ay ents r ade
Tpor ns to their local Tesident

aritable institution pays

rits regul i
fo gular repairs and maintenance of its facilities to C
a S$ to Carmel

Manpower Service Incorporated. As the acc F

exempt entity, how much withholding tax will you in oe
its supplier (Carmel) for the repairs and mé mine
a. Exempt from withholding tax. "
b. 1% withholding tax on its gross paym

c. 2%withholding tax on its gross pa . ' :

d. 5% withholding tax on its gross coer

intenance expense”

accounti ; and Santos

ing firm to conduct its annual audit for the year 501 .

Ayer corporation pai

equivalent to POD Milton one ' st 09 VGS J =

Roh a payment to VGS & Co

: Exempt from withholding tax.

F as to 1% withholding tax on its gross payment

ubject to 2%withholding tax on its gross payment

Subject to 5% withholding tax on its gross payment,

- JB bo ‘ :
0 ‘ Te ;
kstore is using cash method of accounting in recognizing

its tax :
fi cre Income and deductions. For the current year, JB
- €d to adopt the accrual method of recognizing income and
nN. . . ~ ~ ~
Ses. The application for permission to change the method

249
he basis upon which retur 18 me
C

dandt
of accounting employe then
shall be filled to the BIR within:

a. 90 days
b. 60 days
c. 30 days
d. 15 days

52. With regard to the question, how may financial statement ang
tax return copies are filled with the Bureau of internal Revenye»

Duplicate

Triplicate

. Quadruplicate

As many as required by the revenue officer.

aos

53. A Taxpayer is required by law to retain and preserve Books of

Accounts and other accounting records?

10 years from deadline of filing return;

S years from deadline of filing return;

3 years from deadline of filing return;

| year trom deadline of filing return:

&

oo

250
~

'

IAAES

18.
19.
20.

SER INDAN EW

Dn

YQANBDBBBNVNVPSOUFUFUWwOIAO

ANSWER KEY

ON
CORPORATION
21. A
22. C¢
23. D
24. D
25. B
26. A
27. B
28 B
2» =D
30 OB
31 2B
32. =A
33. 2=«A
34. =D
35. D
36. =A
37.
38. 2B
39
40. B

41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
rrrrraFeFranndnanan