Mr.

Asuncion receive the following royalties from the sources:

Mining claims 150,000

Novel “Alicia in Wonderland” 250,000
Basic Accounting textbook 80,000
Musical composition 40,000
What is the total amount to be reported in gross income?

On July 1, 2014, Mr V. leased his vacant lot for a period of 12 years to Mr. J at an annual rate of 2,400,000. It was also
agreed that Mr. J will pay the ff:

4,800,000 representing rental payment for two (2) years. Subsequent rental payments will be made every July 1 of the
applicable year.
Security deposit of 2,400,000
Annual real property tax of 30,000

The lease contract provides, among others that the lessee will construct a 5-storey building for parking purposes at a
cost of 36,000,000. Ownership of the building shall belong to the lessor upon the expiration of termination of the lease
contract.

The building was completed on July 1, 2016 with an estimated useful life of 15 years.

Assuming Mr. V will use outright method un recognizing income from leasehold improvements, how much is the total
income from lease for year 2016?

Assuming Mr. V will use spread-out method un recognizing income from leasehold improvements, how much is the
total income from lease for year 2016?

How much income is to be reported by the lessor in 2014?

A resident citizen, widower, with a dependent minor brother, has the following data on Income and expenses:

Gross Sales 1,500,000

Cost of sales 1,000,000

Business expenses 200,000

Interest from savings deposit, BPI-makati phil. 50,000

Prize in literary contest he joined 100,000

Prized received for achievement in literature (did not join the conte,) 10,000

Gain from sale of bonds (maturity 6 yrs.) 5,000

Separation pay from his former job (resigned) 250,000

Cash he inherited from his uncle 300,000

Proceeds of his wife’s life insurance (irrevocable benefe.) 1,000,000

Amount received as a return of premium (premium paid 150,000) 200,000

Tax informer’s reward 500,000

Winnings from illegal business 10,000

How much was the total amount of inclusions to gross income subject to progressive tax?
How much was the total final tax from certain income?