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Business Transactions: Business and Transfer Taxation 6Th Edition (By: Valencia & Roxas) Suggested Answers
Business Transactions: Business and Transfer Taxation 6Th Edition (By: Valencia & Roxas) Suggested Answers
Business Transactions: Business and Transfer Taxation 6Th Edition (By: Valencia & Roxas) Suggested Answers
SUGGESTED ANSWERS
Chapter 8: BUSINESS TRANSACTIONS
CHAPTER 8
BUSINESS TRANSACTIONS
Problem 81
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
False Vatable transactions of non-VAT business is not allowed to deduct input VAT.
True
False Some business transactions are VAT-exempt.
True
False subject to OPT.
True
True
False not allowed for TCC and tax refund, but allowed only for tax credit.
True
False Zero rated sales are applicable only to VAT-registered business/person. This is a VATexempt and OPT-exempt transactions.
True
False It can be claimed as a deduction from sale as part of cost of product sold.
True
False Sales of non-VAT person, exceeding P1,919,500 per year is also subject to VAT.
False Only those agricultural and marine food products.
Problem 82
1. False Publication of newspaper is VAT-exempt and also OPT-exempt.
2. True
3. False The exemption pertains only to Output VAT.
4. True
5. False Zero VAT transactions are applicable only to VAT-registered persons.
6. False Some VAT taxable transactions have not allowed to have Input VAT particularly if the
business is a non-VAT.
7. False Exempt from business tax because it is considered as a subsistence livelihood.
8. True
9. False Exempt from VAT.
10. False zero VAT.
11. False VAT-exempt.
12. True
13. False VAT-exempt and OPT-exempt.
14. False more than P3,199,200.
15. True
Problem 8 3
1. B
2. B
3. C
4. D
5. B
6. C
7. D
8. B
9. C
10. A
Problem 8 4
1. A
2. C
3. D
4. B
5. A
6. B
7. A
8. D
9. C
10. D
Problem 8 5
1. D
2. B
3. A
4. C
5. C
6. B
7. A
8. A
9. C
10. C
BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS) 60
SUGGESTED ANSWERS
Chapter 8: BUSINESS TRANSACTIONS
Problem 8 6
1.
A
2.
D
3.
D
4.
A
5.
A
6.
D
7.
A
8.
C
9.
A
10. C
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
C
E
D
C
C
A
C
D
D
E
Problem 8 7
A
Business tax payable (P2,500,000 x 12%)
P300,000
Note: The gross sales exceeds P1,919,500; hence, subject to 12% even if the taxpayer is non-VAT.
Problem 8 8
C
Domestic sales
Importation of goods
Transaction deemed sales
Total amount subject to VAT
P1,000,000
500,000
100,000
P1,600,000
In general, importations are subject to 12% VAT regardless of the business tax registration of the
taxpayer. The VAT on importation, however, is an input tax.
Problem 8 9
D
Output VAT from collections (P4,480,000/9.3333)
Less: Input VAT from supplies used (P560,000/9.3333)
Input VAT from importation (P112,000/9.3333)
VAT payable
P480.000
P60,000
12,000
Problem 8 10
B
Export sales (P2,000,000 + P1,000,000)
Problem 8 11
B
Business tax payable (P2,000,000 + P7,000,000) x 3%
72,000
P408,000
P3,000,000
P270,000
The annual gross receipts from business does not exceed P10,000,000; hence, subject to 3% OPT.
Problem 8 12
C
P600,000, only input VAT due or paid from purchases is allowed to apply for TCC. Transitional
input VAT and presumptive Input VAT are not allowed.
Problem 8 13
D
Zero-rated VAT. Sale of power or fuel generated through renewable sources of energy such as
biomass, solar, wind, hydropower, geothermal ocean energy, and other emerging energy sources
using technologies such as fuel cells and hydrogen fuels
Problem 8 14
D
Multi-purpose cooperative registered with CDA are exempt from business tax.
BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS) 61
SUGGESTED ANSWERS
Chapter 8: BUSINESS TRANSACTIONS
Problem 8 15
A
Passenger by sea
Cargo by land
Cargo by sea
Total VAT taxable transactions
Problem 8 16
B
Export sales
Sales of agricultural food products original state
Gross receipts derived from millings of palay
VAT-exempt transactions
1,500,000
500,000
500,000
P2,500,000
P10,000,000
6,000,000
2,000,000
P18,000,000
Problem 8 17
D
5 commercial lots at P1,000,000 each
P5,000,000
The sales of residential house and lots or residential lots are all VAT-exempt and OPT-exempt.
Problem 8 18
C
4 residential lots at P2,000,000 each
1 commercial lots at P3,000,000 each
Amount subject to business tax
P 8,000,000
3,000,000
P11,000,000
The sale of residential house and lot at P3,000,000 each is exempt from business tax.
Problem 8 19
B
Gross receipts exempt from business tax (P2,000 x 50)
P100,000
Problem 8 20
1. Output VAT (P134,400/9.3333)
Input VAT (P112,000/9.3333)
Business tax liability of X
2.
P14,400
(12,000)
P 2,400
Problem 8 21
1. Sales from:
Local government units (P940,000/1.06)
University of the Philippines (P564,000/1.06)
Department of Tourism (P282,000/1.06)
Total sales
P 3,000
12,000
6,000
P21,000
P886,792
532,075
266,038
P1,684,905
Note: The total withholding per sales was 6% comprising 5% final withholding VAT
and 1% creditable withholding income tax.
2.
P16,849
3.
P84,245
BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS) 62
SUGGESTED ANSWERS
Chapter 8: BUSINESS TRANSACTIONS
Problem 8 22
1. VAT-registered
Transport of passengers by sea
Transport of cargoes by:
Land
Sea
VAT taxable transactions
2.
Non-VAT registered
Transport of passengers by sea
Transport of cargoes by:
Land
Sea
VAT taxable transactions
P2,000,000
500,000
1,000,000
P3,500,000
P2,000,000
500,000
1,000,000
P3,500,000
Note: The said non-VAT registered business shall now be subject to VAT because its total gross
receipts exceed P1,500,000. The gross receipts from transport of passengers, however, shall
remain subject to percentage tax.
Problem 8 23
1. VAT-registered
From radio ads
From TV ads
VAT taxable transactions
Multiplied by VAT rate
Value-added tax
2.
Non-VAT registered
From radio ads
From TV ads
Amount subject to OPT
Multiplied by applicable OPT rate
Other percentage tax
P5,000,000
4,000,000
P9,000,000
12%
P1,080,000
P5,000,000
4,000,000
P9,000,000
3%
P 270,000
Note: A non-VAT registered franchise grantees of radio and television broadcasting with annual
gross receipts of P10,000,000 or less is not subject to VAT, unless VAT-registered.
Problem 8 24
Output VAT Zero rated because foreign denominated sales
Input VAT (P336,000/9.3333)
VAT refund
Problem 8 25
On purchases:
Local purchases from VAT-registered person
On sales:
Domestic sales to various VAT person
Domestic sales to various non-VAT person
VAT taxable transactions against X
P - 0 ( 36,000)
(P 36,000)
P600,000
P 800,000
600,000
P1,400,000
BUSINESS AND TRANSFER TAXATION 6th Edition (BY: VALENCIA & ROXAS) 63
SUGGESTED ANSWERS
Chapter 8: BUSINESS TRANSACTIONS
Problem 8 26
1. P - 0 The business is non-VAT and total sales do not exceed P1,500,000/year
2.
3.
Problem 8 27
1. VAT-registered
Domestic sales
Export sales
Total value of sales allowed with creditable Input VAT
2.
Non-VAT registered
a. Domestic sales VAT taxable sales
b. Zero-rated sales
c. Export sales VAT-exempt sales of a non-VAT business
P 50,000
100,000
200,000
P350,000
P 2,000,000
3,000,000
P 5,000,000
P 2,000,000
P
- 0 -
P 3,000,000