F6 Midterm Test (Answer) 190422

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MIDTERM EXAMINATION – TAXATION (Updated 10.03.22)

Total questions: 15 MCQs
Time: 37.5 minutes
SUPPLEMENTARY INSTRUCTIONS
1 Calculations and workings need only be made to the nearest VND, unless instructed
. otherwise.
2
. All apportionments should be made to the nearest month.
3. All workings should be shown in Section
TAX RATES AND ALLOWANCES
The following tax rates and allowances are to be used in answering the questions
Value added tax (VAT)
Standard rate 10%
Reduced rate 5%
Corporate income tax (CIT)
Standard rate for enterprises 20%
Rates of exchange
The following rates of exchange are to be used in answering all questions in this paper
(unless otherwise stated):
USD 1 = VND 23,000

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1. ABC Co, a Vietnamese company, rented an office for its operations from 1 April 2021
and paid a deposit of VND1,584 million, equivalent to three monthly rental fees,
inclusive of 10% value added tax (VAT). Rent is payable three months in advance.
What is the amount of deductible rental expense which ABC Co can claim for corporate
income tax (CIT) purposes in the year ended 31 October 2021 ?
A. VND 10,080million
B. VND 3,360million
C. VND6,48 0 million
D. VND5,544 million
Answer: VND 3,360 million ( 1,584 / (1 + 10%)/3 *7 months)
The monthly rental expenses net of value added tax (VAT) would be 1,584/(1 + 10%)/3
months = 480 million per month. Total rent period in the year would be seven months
(not ten months).
2. ABC Limited is operating a factory with the net book value of US$ 2,000,000. It is now
creating a joint venture named MNG Limited with another partner and shall contribute
the factory into MNG Limited as its 51% capital contribution. ABC Limited and its joint
venture partner mutually agree that the factory is valued at US$3 ,0 00,000 for capital
contribution purpose. The residual useful life of this factory is 10 years.
Please calculate the annual depreciation that MNG Limited shall make.
A. 200,000 USD
B. 100,000 USD
C. 150,000 USD
D. 300,000 USD
Answer: Annual depreciation = 3,0 00,000/10 = 300,000 USD
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3. In 2021 , ABC Co, a Vietnamese company, received compensation in cash of VND2

,000 million from an insurance company for damage to goods caused by a fire. According to
the insurance policy, the compensation does NOT cover any value added tax (VAT) on the
purchase of the goods. The insured goods were purchased by ABC Co for VND3 ,30 0
million (inclusive of VAT 10%).
What is the amount of output value added tax (VAT) and creditable input VAT (in VND
millions) ABC Co is required to declare in 2021 as a result of the above transactions?
Output VAT Creditable input VAT
A. VND2 00 million VND0 million
B. VND0 million VND30 0 million
C. VND0 million VND0 million
D. VND2 00 million VND30 0 million
Answer: VND0 million output VAT and VND300 million (3,300 /1. 1*10%) creditable
input VAT
According to Article 14.1 of Circular 219/2013, uninsured input VAT from damages due to
fire would be creditable in full. According to Article 5, example 14, compensation in cash
would not be subject to VAT declaration (VAT output = 0).
4. In July 2021 ABC Co, a company incorporated in Vietnam purchased two identical items
of equipment A and B, for a total amount of VND 24 ,000 million (exclusive of value
added tax (VAT)). The estimated useful life of the equipment is five years and ABC Co
depreciates it on a monthly basis. Both A and B are used from August to December each
year to make a product that is consumed specifically on the occasion of Lunar New Year in
2021 , both A and B were fully operated from August to December. In 2022 , as orders
received were insufficient, only A was fully functional from August to December 2022
while B was used from November to December 2021 only.
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What is the total accumulated depreciation expense of ABC Co for corporate income tax
(CIT) purpose with respect to equipment items A and B for the fiscal year ended 31
December 2022 ?
A. VND2 ,8 00 million
B. VND 7 ,2 00 million
C. VND5 ,2 00 million
D. VND 4 ,8 00 million
Answer: VND5 ,2 00 (2 00 * (6 + 12) + 2 00 * (6 + 2))
According to Article 6, point 2.2(e) of Circular 78/2014 as amended by Circular 96/2015,
where non-current assets used for seasonal production are temporarily unused for less
than nine months, the enterprise is allowed to depreciate the assets during idle time. In
2022 , A was unused for seven months so can be depreciated over 12 months for CIT
purposes and B was unused for ten months so can be depreciated for only two months.
Monthly depreciation for each: 24 ,000/2 items of equipment/5 years/12 months = 2
00
Accumulated depreciation: [A = 2 00 * (6 + 12)] + B = [2 00 * (6 + 2)] = 5,2 00
5. In 2021 , ABC Co, a company incorporated in Vietnam, purchased a four-seated car for
the Deputy General Director. The quoted price of the car was VND 1,980 million (inclusive
of value added tax (TAX)). ABC Co obtained a 20% discount off the quoted price from
the car dealer. The sales invoice from the dealer shows both the quoted price and the
discount.
What is the amount of creditable input VAT (round to the nearest VND million) which ABC
Co should claim for the car in the fiscal year 2021 ?
A. VND180 million
B. VND144 million
C. VND158 million
D. VND160 million
Answer: VND144 million creditable input VAT (1,980 million * 80%/1. 1 * 10%)
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According to Article 14.3 of Circular 219/2013, the taxable amount for creditable input VAT
for the purchase of a car with fewer than nine seats is capped at VND1,600 million. In this
case, the quoted price net of VAT exceeds VND1,600 million (1,980/1. 1). However, the
actual price net of VAT after discount was VND1, 440 million (1,980 * 80 %/1. 1),
therefore input VAT is fully creditable.
6. ABC Co, a Vietnamese company applying the value added tax (VAT) deduction method,
provided services to a foreign customer for VND4 00 million and charged VAT at 5% on
the invoice. In a tax review by a consultant, it was identified that the VAT rate used on the
invoice should have been 10%, however, ABC Co can no longer claim back the
undercharged VAT from the foreign customer.
What is the amount of additional output VAT which ABC Co will need to pay to the tax
authorities (rounded to the nearest VND million)?
A. VND 18 million
B. VND 20 million
C. VND 22 million
D. VND4 0 million
Answer: VND 18 million
According to Example 56 in Article 12 of Circular 219/2013/TT-BTC], the total payment by
foreign customers, which is 42 0mil is considered inclusive of 10% VAT. The correct VAT
payable is:
420 mil / (1+10%) x 10 % = 38 mil
Additional VAT payable by taxpayer A:
38 mil – ( 400 mil x 5%) = 18 mil
7. Ms Lan Tran, who gave birth on

1 February 2021 , is CEO of ABC Co, a company in Vietnam. She returned to work on 1
May 2021 , despite the company policy and the regulations allowing her a six-month
maternity leave. When she returned, the company paid her normal salary of VND6 00
million per month and in addition, during the three months ended 31 July 2021 , she
received an overtime allowance of VND30 0 million per month (which is within the range
of allowed overtime under prevailing labour regulations). However, Ms Lan Tran did not
actually work any overtime and the allowance was paid to compensate her for early return
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from maternity leave as a result of work requirements. The company and Ms Lan Tran
did not claim any maternity leave benefits from social insurance from May 2021
onwards.
What is the adjustment amount for non-deductible expenses which ABC Co should make
in its corporate income tax (CIT) return for the year ended 31 December 2021 in respect
of the payments to Ms Lan Tran?
A. VND2,700 million
B. VND90 0 million
C. VND0 million
D. VND1,8 00 million
Answer: VND0 million
According to Article 6, point 2.10 of Circular 78/2014 as amended by Circular 96/2015,
payments to employees (including overtime) are fully deductible where employees return
to work before the end of the allowed maternity leave period as a result of work
requirements. In this case, Ms Lan Tran is treated as if she was working overtime during
May to July when she should have been on maternity leave. Accordingly, no adjustment is
needed.
8. In March 2021 , ABC Co, a Vietnamese company, disposed of a machine for VND4 ,4
00 million. The machine was purchased in January 2020 for VND7,2 00 million with
an estimated useful life of three years. ABC Co’s policy (which is acceptable for tax
depreciation) is to provide for a full month’s depreciation in the month of purchase and no
depreciation in the month of disposal.
What is the taxable gain on the disposal of the machine which ABC Co must declare for
corporate income tax (CIT) purposes for its financial year ended 30 June 2021 ?
A. VND2 00 million
B. VND4 ,4 00 million
C. VND0 million
D. VND1,6 00 million
Answer: VND0 million
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Depreciation per month: 7 ,2 00 million/36 months = 2 00 million/month

Gains = 4 ,4 00 million proceeds – (7 ,2 00 million – (2 00 million*14 months
(from January 2020 to February 2021 ))) = 0 million
9. On 30 June 2021, ABC Co, a Vietnamese company, identified the value added tax (VAT)
declaration it made for April 2021 was under-declared by VND2 ,000 million. It should
be noted that 21 May 2021 was a Monday, and there had been no tax audit at ABC Co
in 2021 .
What is the late payment interest (in VND) which ABC Co is required to settle on 30 June
2021 , assuming the under-declared value added tax (VAT) was settled on that date?
A. VND24 ,6 00,000
B. VND30 ,000,000
C. VND4 0,000,000
D. VND24 ,000,000
Answer: The lastest time to pay tox for April is 20 May
The late payment= 2 ,000 million*0.03% per day*40 days (from 21/5-30/6) = 24 million
10. Which combination of the following statements correctly describes the treatment of
foreign exchange gains/losses arising during the construction period of a new company
which has no revenue?
(1) Gains and losses must be accounted for separately when a fixed asset being a
construction is put into operation
(2) Gains and losses must be offset when a fixed asset being a construction is put into
operation
(3) All gains and losses that occur during the investment phase must be recognised in the
first year after the project is put into operation
(4) Gains and losses must be deferred and allocated over a period of up to five years from
when
the project is put into use
A. 1 and 3
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B. 1 and 4
C. 2 and 3
D. 2 and 4
Answer: D The net foreign exchange gains/losses after offsetting are allocated over a
period of up to five years from the project being put into use – point 2.22, Article 6 of
Circular 78/2014.
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11. ABC Co a company intercorporate in Vietnam is subsidiary of HIJ Co, a company

incorporated in the Russia. In 2021, HIJ Co said ABC Co sold ABC Co shares to
MNG Co, a company incorporated in Thaniland, at a gain. The transfer agreement was
signed on 1 July 2021 and the transfer was approved by the competent authority on 15
July 2021.
What is the deadline for the submission of the tax declaration in respect of the capital gain
arising on the share trans fer, and which party is responsible for the declaration?
Deadline Declared by
A. 11 July 2019 HIJ Co
B. 25 July 2019 ABC Co
C. 11 July 2019 AB C Co
D. 25 July 2019 HIJ Co
Answer: B. 25 July 2021 by ABC Co

According to Article 12.7(b) of Circular 156/2013 as amended by Circular 151/2014,
26/2015 and 130/2016, the deadline for the tax declaration of the capital gain is 10 days
from the date of approval by the competent authority, or from the date of the transfer
agreement where no approval is required. In cases where both buyer and seller are
overseas companies, the company in Vietnam would be responsible for the declaration.
12. In February 2021 , ABC Co, a Japanese investor, sold its capital contribution in MNG
Co, a Vietnamese limited liability company, to a foreign buyer for USD20 million, when
the USD buy–sell exchange rate from the commercial bank was VND24 ,000–VND24 ,5
00. The original capital contribution in MNG Co was USD2 0 million which is reflected
in the audited financial statements at an exchange rate of USD1 = VND23 ,000. The
transfer expenses incurred were immaterial. MNG Co’s functional currency is VND.
What is the corporate income tax (CIT) liability incurred by ABC Co on the sale of its
capital contribution in MNG Co in the year 2021 ?
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A. VND4 ,000 million

B. VND0 million
C. VND6,0 00 million
D. VND400 million
Answer: VND4 ,000 million ( USD20 million*(24 ,000 – 23 ,000) * 20%) Since ABC
Co is a limited liability company, the corporate income tax rate would be 20% on taxable
profit. As MNG Co’s (the target company) functional currency is in VND, according to
Article 14.2 of Circular 78/2014 as amended by Circular 96/2015, the sale price must be
converted into VND using the USD buying rate of the commercial bank. Accordingly, the
taxable profit would be the difference in exchange rate.
13. ABC is a Vietnamese company listed on the stock market. The company has seven board
members; three are active members and the remaining four are non-active members.
According to the board resolution, members in each category should receive equal salary.
Active members who participate directly in managing the company’s operations receive a
salary which is 150% of the salary of the salary receives by non-active members. The
company recorded a total salary expense for the board of VND 17 ,000 million in its
accounting books for the fiscal year ended 31 December 20 21 .
What are the non-deductible expenses ABC should declare in its corporate income TAX
(CIT) return for the fiscal year ended 31 December 2021 ?
A. VND1 7,000 million
B. VND0 million
C. VND12 ,000 million
D. VND8 ,000 million
Answer: VND8 ,000 million
VND8 ,000 million = 17 ,000 million / (3 * 1.5 + 4) parts * 4 parts paid to non-active
members
Non-active members’ salaries are non-deductible (Article 6, point 2.6(d) of Circular 78/2014
as amended by Circular 96/2015).
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14. ABC Co is a Vietnamese company. It declared value added tax (VAT) on a monthly basis for
the three-year period from 2017 to 2019 . In 2019 , the company generated total
revenue of VND80,000 million. ABC Co continued declaring VAT on a monthly basis for
the three-year period from 2020–2022 . In 2020 and 2021 , ABC Co’s total
declared revenue was VND72,000 million and VND78,000 million respectively.
However, following a tax audit in 2021 , the company’s revenue in 2020 was adjusted
to VND45,000 million.
Which of the following combinations correctly describes the value added tax (VAT) filing
requirements of ABC Co for the period 2020 – 20122 as a result of the tax audit?
2020 2021 2022
A. Monthly basis Quarterly basis Quarterly basis
B. Monthly basis Monthly basis Quarterly basis
C. Monthly basis Monthly basis Monthly basis
D Quarterly basis Quarterly basis Quarterly basis

.
Answer: C
According to Example 23, Article 11.2 of Circular 156/2013 (revised by Circular 26/2015),
once a company has selected a mechanism, i.e. monthly value added tax (VAT) declaration,
for a stable three-year period using the results of the preceding year (i.e. 2019 in this
case) on the basis that the revenue of that preceding year exceeds VND50,000 million, the
company is not required to change the mechanism. This is the case even where the audited
results of any year show that the revenue subsequently fell below VND50,000 million.
15. Which are fully deductible for CIT purpose?

(i) Life insurance premium
(ii) Golf membership and fees
(iii) Incentives for initiatives, improvement without basis (e.g. no internal regulations, no
assessment council);
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(iv) Special bonus on 1 May and 2 Sept as per the company financial policy;
(v) Uniform without invoice, paid by cash directly to employee: 8,500,000 VND per year per
person.
A. (i) and (iv) and (v)
B. (i) and (iv)
C. (i) and (ii) and (iv)
D. (iv) only
Answer: Article 4 Circulars 96/2015
(i) Point 2.11: Are not deductible if excess 3million VND/person
(ii) Point 2.14; If not related to production and business activities are not deductible
(iii) Without basis are not deductible
(iv) Fully deductible
(v) Point 2.7: The expense of outfits in cash to the employee in excess of 05 (year) million /
person / year are not deductible
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MIDTERM EXAMINATION - FINANCIAL REPORTING

ANSWER SHEET
Full Name: Mark:

Class Code: Examination Date:
Teacher: Feedback Turnaround Date:
A B C D A B C D A B C D
1 Ο Ο Ο Ο 11 Ο Ο Ο Ο 21 Ο Ο Ο Ο
2 Ο Ο Ο Ο 12 Ο Ο Ο Ο 22 Ο Ο Ο Ο
3 Ο Ο Ο Ο 13 Ο Ο Ο Ο 23 Ο Ο Ο Ο
4 Ο Ο Ο Ο 14 Ο Ο Ο Ο 24 Ο Ο Ο Ο
5 Ο Ο Ο Ο 15 Ο Ο Ο Ο 25 Ο Ο Ο Ο
6 Ο Ο Ο Ο 16 Ο Ο Ο Ο 26 Ο Ο Ο Ο
7 Ο Ο Ο Ο 17 Ο Ο Ο Ο 27 Ο Ο Ο Ο
8 Ο Ο Ο Ο 18 Ο Ο Ο Ο 28 Ο Ο Ο Ο
9 Ο Ο Ο Ο 19 Ο Ο Ο Ο 29 Ο Ο Ο Ο
10 Ο Ο Ο Ο 20 Ο Ο Ο Ο 30 Ο Ο Ο Ο

F6 Midterm Test (Answer) 190422

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SAPP Academy Tel 0466 709 888

5th Floor, No. 54, Duc Dai Building, Le Sapp.edu.vn

MIDTERM EXAMINATION – TAXATION (Updated 10.03.22)

3. All workings should be shown in Section

TAX RATES AND ALLOWANCES

Value added tax (VAT)

Standard rate 10%

Corporate income tax (CIT)

Standard rate for enterprises 20%

USD 1 = VND 23,000

3. In 2021 , ABC Co, a Vietnamese company, received compensation in cash of VND2

Output VAT Creditable input VAT

A. VND2 00 million VND0 million

B. VND0 million VND30 0 million

C. VND0 million VND0 million

D. VND2 00 million VND30 0 million

7. Ms Lan Tran, who gave birth on

Depreciation per month: 7 ,2 00 million/36 months = 2 00 million/month

11. ABC Co a company intercorporate in Vietnam is subsidiary of HIJ Co, a company

Answer: B. 25 July 2021 by ABC Co

A. VND4 ,000 million

2020 2021 2022

A. Monthly basis Quarterly basis Quarterly basis

B. Monthly basis Monthly basis Quarterly basis

C. Monthly basis Monthly basis Monthly basis

D Quarterly basis Quarterly basis Quarterly basis

15. Which are fully deductible for CIT purpose?

MIDTERM EXAMINATION - FINANCIAL REPORTING

Full Name: Mark:

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