Less Cost of livestock 700000 700000 Cost of crop raised 500000 500000 Book

Less cost of livestock 700000 700000 cost of crop

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Less: Cost of livestock 700,000 700,000 Cost of crop raised 500,000 500,000 Book value – tractor 300,000 300,000 Gross income before inventory 950,000 950,000 Add: Ending inventory - 500,000 Total 950,000 1,450,000 Less: Beginning inventory - 700,000 Gross taxable income 950,000 750,000 ======= ======= Exercise 4-14 B Exercise 4-15 C Exercise 4-16 A (Income will be recognized only upon completion, that is on the 3 rd year.) Year 1 Year 2 Year 3 Contract price 25,000,000 25,000,000 25,000,000 Percentage of completion 45% 70% 100% Contract earned 11,250,000 17,500,000 25,000,000 Less: Cost incurred 10,000,000 16,000,000 22,000,000 Gross income to date 1,250,000 1,500,000 3,000,000 Less: Income prior year - 1,250,000 1,500,000 Gross income – annual 1,250,000 1,250,000 1,500,000 35
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======== ======== ======== Exercise 4-17 A Monthly rental (15,000 x 10) 150,000 Shares on real estate tax 2,500 Gross taxable rent income 152,500 ====== Exercise 4-18 C Monthly rental income 150,000 Security deposit 45,000 Shares on real estate tax 2,500 Gross taxable rent income 197,500 ====== Exercise 4-19 A 2008 rental (10,000 x 9) 90,000 Real property tax (6,000/12 x 9) 4,500 Taxable rent income – 2008 94,500 ===== Exercise 4-20 D 2009 rental 120,000 Building – FMV 8,000,000 Real property tax paid by lessee 6,000 Taxable rent income – 2009 8,126,000 ======= Exercise 4-21 B Cost of the improvement 6,000,000 Less Accu. dep’n. end of lease [(6,000,000 – 400,000)/50] x 25 2,800,000 Book value 3,200,000 Divided by term of lease 25 Annual income on improvement 128,000 36
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======= Income for 9 months (128,000/12 x 9) 96,000 Add: Taxable rent income (see item 1) 94,500 Gross taxable income 190,500 ======= Exercise 4-22 D Annual income on improvement 128,000 Rental income 126,000 Gross taxable income 254,000 ======= Problem 4-1 Gross compensation income 240,000 Less: Basic personal exemption (M) 50,000 Additional exemption (25,000 x 3) 75,000 HHIP 2,400 127,400 Taxable net income 112,600 ====== Problem 4-2 Gross business income 1,200,000 Other income (460,000 x 65%) 299,000 Gross taxable income 1,499,000 Less: Allowable business expenses (800,000 x 75%) 600,000 Net income 899,000 Less: Basic personal exemption (H/F) 50,000 Additional - HHIP - 50,000 Taxable net income 849,000 ======= 37
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Problem 4-3 Resident Resident Citizen Alien Compensation income 970,000 610,000 Gross business income 1,680,000 960,000 Other income subject to basic tax 260,000 180,000 Interest income on time deposit 40,000 Gross taxable income 2,950,000 1,750,000 Less: Business expenses 1,080,000 610,000 Taxable income before personal exemption 1,870,000 1,140,000 ======= ======= Problem 4-4 Salaries from employment 280,000 Share in the net income 65,000 Bonus (18,000 + 32,000) – 30,000 20,000 Other fringe benefits 32,000 Dividend from non-resident foreign corporation 48,000 Gross taxable income 445,000 Less: Basic personal exemption (M) 50,000 Additional exemption (25,000 x 3) 75,000 125,000 Net taxable income 320,000 ====== Problem 4-5 Salary (400,000 – 8,000) 392,000 13th month pay (55,000 – 30,000) 25,000 Representation and traveling allowance 60,000 38
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Gross taxable income 477,000 Less: Basic personal exemption (H/F) 50,000 Additional exemption - 50,000 Net taxable income 427,000 ====== Problem 4-6 Compensation income 800,000 Christmas bonus (82,000 – 30,000) 52,000 Gross taxable income 852,000 ====== Problem 4-7 Winnings from gambling 650,000 Actual damages for unrealized profits 200,000 Gross taxable income 850,000 ====== Problem 4-8 2009 2010 1.Sales 3,500,000 0 Less: Cost of sales 2,100,000 0 Gross profit/income 1,400,000 0 ======= === 2.2009 (1,400,000/3,500,000) x 1,300,000 520,000 2010 (1,400,000/3,500,000) x 2,200,000 880,000 Total income 1,400,000 ======= Problem 4-9 2009 2010 1.Sales 6,000,000 0 Less: Cost 4,000,000 0 Gross profit 2,000,000 0 39
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======= == 2.Percentage of initial payment to selling price is 20% [(P720,000 + 480,000)/P6,000,00]; hence, the taxpayer may opt for installment payment. 2009 (2,000,000/6,000,000 x P1,200,000 400,000 2010 (2,000,000/6,000,000) x P4,800,000 1,600,000 Gross profit 2,000,000 ======= Problem 4-10 2009 2010 1.Sales 3,000,000 0 Less: Cost 2,000,000 0 Gross profit 1,000,000 0 ======= == 2.Percentage of initial payment to selling price is 30% (P900,000/P3,000,000); hence, the installment payment method cannot be used. Rather, the deferred payment will be used. 2009 income Cash collected 900,000 Less: Cost 2,000,000
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