PROBLEM 1

The following data (net of VAT) are available for a particular calendar year:

Third quarter: Sales P1,500,000

Purchases 800,000

Purchase of machinery (first month of the quarter) 2,000,000

Unutilized input VAT as of end of second quarter 97,000

VAT payments for the first two months of the quarter 50,000

Fourth quarter: Sales P4,000,000

Purchases 100,000

Proceeds from sale of machinery purchased in 3 rd quarter 1,500,000

VAT payments for the first two months of the quarter 100,000

Questions:
1. How much is the output tax for the third quarter?
2. How much is the total input tax for the third quarter?
3. How much is the VAT payable (excess input tax) for the quarter using 12%
rate?
4. What is the treatment of excess input tax, if any?
 Excess VAT from a previous quarter can be deducted in the first
month of the current quarter; excess VAT in the first month of the
quarter can be deducted in the second month but the excess in the
second month can no longer be deducted in the third month. Lastly,
excess VAT from prior quarter is deductible in the third month
quarterly balance of the current quarter.
5. When shall the quarterly VAT return be filed for the third quarter?
 On or before September 25 (25 days from the end of the quarter)
6. How much is the output VAT for the fourth quarter using 12% rate?
7. How much are the total input taxes for the fourth quarter?
8. When shall the quarterly VAT return be filed for the fourth quarter?
 On or before December 25 (25 days from the end of the quarter)

PROBLEM 2

Sweet Tooth, Inc. manufactures refined sugar. The following selected data are taken
from its books:

Sale of refined sugar, net of VAT P2,000,000 Purchase of sugar cane from
farmers 500,000 Purchases of packaging materials, gross of VAT 784,000
Purchase of labels, gross of VAT 112,000 Advance payment of VAT before
release from refinery 60,000

Questions:
1. Can the taxpayer avail of the presumptive input tax? Why or why not?
 Yes. According to National Internal Revenue Code (NIRC),
firms who are engaged in the processing of refined sugar
shall be allowed a presumptive input tax.
2. How much is the presumptive input tax? P 20,000
3. How much is the total input tax credits? P 187,520
4. How much is the output tax using 12% rate? P 240,000
5. How much is the VAT payable using 12% rate? P 52,480
PROBLEM 3

Dayag Builders was a contractor. It entered into a contract on December 31, 2020,
which was completed on February 15, 2021. The contract price was P5,500,000.
Dayag Builders collected P3,500,000, net of VAT on February 25, 2021. It spent for
the materials used in the contract which it acquired from value-added registered
suppliers amounting to P1,500,000, net of VAT. During the month of February 2021,
it purchased an equipment in installment with total agreed price of P1,120,000, VAT
inclusive and paid P500,000 down payment. The estimated useful life of the
equipment was four (4) years.

Dayag Builders had its bulldozers assembled by a VAT-registered taxpayer starting

February 2021. It will take six (6) months for the bulldozer assembler to finish it.
Dayag Builders bought materials to be used in assembling the bulldozer at a cost of
P500,000, net of VAT. Progress billing for February 2021 amounting to P100,000, net
of VAT, was sent by the bulldozer assembler to Dayag Builders. It was paid in the
same month.

Questions:
1. How much is the output tax using 12% VAT?
2. Can the taxpayer amortize the input on purchase of equipment? Why or why
not?
3. How much input tax can be claimed for the assembly of the bulldozer?
4. How much is the total creditable input tax?
5. How much is the VAT payable using 12% rate? P 461,250
6. When shall the VAT declaration be filed?

PROBLEM 4

Abel Corporation is a merchandising concern and has an inventory of goods for sale
amounting to P1,000,000. Nel Corporation, a real estate developer, exchanged its
real estate properties for the shares of stocks of Abel Corporation resulting to the
acquisition of corporate control.

Questions:
1. Is the inventory of goods owned by Abel Corporation subject to output tax?
 No. Because, as a result of the corporate control, the same
corporation still owns the goods.
2. Is the exchange of real estate properties held for sale or for lease for shares of
stocks subject to VAT?
 Yes. Whether or not the transaction resulted to a corporate control, it
would still be subject to VAT.
3. Assuming Abel Corporation is another real estate dealer, is there an output
VAT?
 No.