Acc 143 151 p1 Rationalization 1
Acc 143 151 p1 Rationalization 1
Mr. X, the Property Manager of DST Corp. was tasked to buy a commercial lot where the company building will be
built. The COO of DST Corp. issued a Power of Attorney for this matter and instructed Mr. X to look for a lot that will
fit in their Php 10,000,000 budget. Calculate DST (2).
After a month of looking for a commercial lot, Mr. X finally found a perfect site for their new building. The selling price
of the land is Php 9,500,000, the fair market value is Php 9,800,060, and the zonal value is Php 9,200,000. Calculate
DST (3).
With the new building construction, DST Corp. decided to issue bonds in the US to have additional funding. The
corporation issued $500,000 bonds. The conversion rate is $1 = Php 58.53. Calculate DST (4).
Mr. B, an impatient stockholder of DST Corporation, decided to sell his shares right away because of fear of declining
stock price. He sold 1,350 shares to Mr. C for Php 110,000. Calculate DST (5). After selling his shares, Mr. B
immediately went to a horse racing arena and bought 17 horse race tickets at Php 65 each. Calculate DST (6).
On the third month of construction of the building, DST Corp. assessed that they need to borrow funds from XYZ
Bank. They took a loan amounting to Php 5,000,240 for 174 days. Calculate DST (7).
The DST Corp. used its land as a mortgage for the whole loan to XYZ Bank. Calculate DST (8).
The corporation also availed an insurance property for the building for the upcoming calamities. The premium
charged for the insurance amounts to Php 150,000. Calculate DST (9).
They also took the offer of the insurance company to get a life insurance policy for their COO amounting to Php
985,000. Calculate DST (10).
DST Corporation entered into a lease agreement for additional office space. The annual lease is Php 1,200,000 for
3.5 years. Calculate DST (11).
Due to slow cash inflow, DST Corp. failed to pay its suppliers on time. DST Corporation issued promissory notes
worth Php 542,095 to a supplier. Calculate DST (13).
542,095 / 200 = 2,711 x 1.50 = 4,066.50
DST Corporation issued 20 certificates of deposit not bearing interest totaling Php 1,000,000. Calculate the DST (14).
20 x 3 = 60
DST Corporation also issued bills of exchange amounting to Php 1,738,557. Calculate the DST (15).
1,738,557 / 200 = 8,693 x 0.60 = 5,215.80
Maria owns a BMBE that manufactures handmade soaps. Her total assets (excluding the land) amount to Php
2,500,000. She wants to expand her business by purchasing additional equipment. To maintain her BMBE status,
she plans to take out a loan for the new equipment. What is the maximum loan amount she can take without
exceeding the asset limit for a BMBE? 3,000,000-2,500,000 = 300,000
Juan’s BMBE has an annual gross income of Php 1,200,000. His business incurs operational expenses amounting to
Php 800,000 annually. Calculate Juan's net income and income tax due (assuming Juan uses 20% income tax rate).
1,200,000-800,000 = 400,000 , exempt from income tax because of BMBE
Juan is a licensed physician who operates a small business engaged in manufacturing furniture. He wants to register
his business as a BMBE to avail of the incentives and benefits under the BMBE Act. Below are the assets of his
business:
• Cash in bank: Php 500,000
• Machinery and equipment: Php 750,000
• Inventory of raw materials: Php 250,000
• Land where the business premises are situated: Php 3,500,000
• Buildings on the land: Php 1,500,000
Total Assets = 6,500,000 , Yes, eligible
Juan availed of your services as a tax consultant. He operates a small manufacturing business and wants to register
it as a Barangay Micro Business Enterprise (BMBE) to avail of the benefits. He showed you his projected financial
statements from Year 1 to Year 3, but there are missing amounts. The following are the information presented to you
regarding Year 3:
Cash in bank: Php 400,000
Machinery and equipment: Php 1,800,000
Other assets: Php 148,750 (25% of Year 3 Inventory)
Land: Php 2,000,000 (where the machinery & equipment are situated)
Inventory increases by 5% every year
Year 3 Total Assets for BMBE consideration: 2,943,750
Year 3 Inventory: 148,750 / 0.25 = 595,000
Year 2 Inventory: 595,000 / 1.05 = 566,666.67
Year 1 Inventory: 566,666.67 / 1.05 = 539,682.54
A group of 4 senior citizens booked a hotel for a vacation. The total bill for their stay, including VAT, amounted to Php
50,000. Calculate the amount they need to pay. (50,000/1.12) x 80% = 35,714.29
Mr. Cruz, aged 65, and his daughter went to a restaurant for dinner. The total bill, including VAT, amounted to Php
5,000. Calculate the amount they need to pay. 5,000/2 = (2,500 / 1.12)x 80% = 1,785.71 + 2,500 = 4,285.71
Mrs. Santos, a senior citizen, visited a restaurant that offers a 25% discount on the total bill for diners arriving before
6:00 PM. Mrs. Santos arrived at the restaurant at 5:30 PM and her total bill, including VAT, came to Php 4,000.
Calculate the total amount Mrs. Santos needs to pay. (4,000 / 1.12)x80% = 2,857.14
At a nursing home, Mr. Santos, a senior citizen aged 70, and his friend Ms. Reyes, a PWD, availed the services of a
licensed professional health worker. The service fee for each of them is PHP 1,500, inclusive of VAT. The health
worker has a promotional offer of P300 off for PWD clients. What is the total amount that should be paid by Mr.
Santos and Ms. Reyes? (1,500/1.12) x 80 = 1,071.43 +1,200 = 2,271.43
A medical doctor had the following clients and gross service fees:
Patients Professional Fees Medicine
Senior Citizens P18,000 P70,000
PWD P12,000 P40,000
Minor patients P10,000 P28,000
Adult patients P24,000 P42,000
The Total VAT Exempt Sales amounts to: (amounts are exclusive of VAT)
18,000+12,000+70,000+40,000 = 140,000
An employer hired a senior citizen during the year as a temporary replacement for its staff who went on one year
sabbatical leave. Mang Juan, the SC, was paid a salary not in excess of the poverty level. He received a total of
P144,000 during the year. Compute the additional deductible compensation expense. 144,000 x 15% = 21,600
4ABC Inc. employs three senior citizens as regular employees. Two of them are receiving the minimum wage which
is within the poverty level. Total minimum wages paid to these senior citizen employees during the year were
P182,000. One of the senior citizen employees is a director of the company who was paid P780,000 compensation
during the year. Compute the additional deductible compensation expense. 182,000 x 15% = 27,300
An employer embarked on a socio-economic program named "A World Empowered by Persons with Disability."
Under the ambitious program, the employer established a business which is fully manned by persons with disability.
The employer incurred P300,000 in workplace improvements specifically designed for its disabled employees. The
business venture turned very profitable due to overwhelming public sympathy. During the year, the employer paid
P2,100,000 in compensation expense. Compute the additional deductible compensation expense. 2,100,000 x 25%
= 525,000