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Income Taxation Answer Key

This document contains a series of true/false and multiple choice questions related to fringe benefits. It also includes several word problems calculating fringe benefit tax amounts for different employee benefits provided, such as housing, cash for expenses, vehicles, and residences. The problems provide monetary values and ask the reader to calculate fringe benefit tax amounts based on the given percentages and formulas.

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Misherene Magpile
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1K views5 pages

Income Taxation Answer Key

This document contains a series of true/false and multiple choice questions related to fringe benefits. It also includes several word problems calculating fringe benefit tax amounts for different employee benefits provided, such as housing, cash for expenses, vehicles, and residences. The problems provide monetary values and ask the reader to calculate fringe benefit tax amounts based on the given percentages and formulas.

Uploaded by

Misherene Magpile
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

MAGPILE, MISHERENE V.

BSAI-G1

TRUE OR FALSE
PAGE 279 & 280

1. True 12. True


2. True 13. true
3. True 14. True
4. True 15. True
5. True 16. True
6. True 17. True
7. True 18. True
8. True 19. True
9. True 20. True
10. True 21. True
11. True 22. True

MULTIPLE- CHOICE
PAGE 281- 285

1. A- grossed- up monetary value


2. C- both of the above
3. D- all of the above
4. C- de minimis benefit
5. C- managerial employee
6. E- none of the above
7. B-  Dr. fringe benefit tax, Cr cash
8. E- all of the above
9. D- all of the above
10. E- none of the above
11. A- fringe benefit
12. A- Dr. Fringe benefit expense and fringe benefit tax expense. Cr. Cash
13. E- all of the above
14. D- deductible by the employer
15. F- none of the above
16. C- supervisory employees
17. E- none of the above
18. D- Rank- and- file employees
19. D- 75%
20. D- reflected in the books in the two accounts of fringe benefit and tax
21. D- all of the above
PROBLEM 1A
FRINGE BENEFIT TAX
PAGE 286

What is the fringe benefit tax for each semester?


Monetary value of Fringe Benefit 75,000
Percentage divisor applicable       65%
FBT rate       35%

FBT= (Monetary value of fringe benefit/ 65%) *35%


FBT= (75,000/65%) * 35%
FBT= 115, 384.62*35%
FBT= 40,385

PROBLEM 1B
FRINGE BENEFIT TAX
PAGE 287

Compute for the fringe benefit tax for each quarter


Monetary value of Fringe Benefit 45,000
Percentage divisor applicable       75%
FBT rate       25%

FBT= (Monetary value of fringe benefit/ 75%) *25%


FBT= (45,000/75%) * 25%
FBT= 60,000*25%
FBT= 15,000

PROBLEMS
PAGE 288-289

THADDEUS,‌‌MARKETING‌‌MANAGER‌‌IN‌‌A‌‌DOMESTIC‌‌CORPORATION,‌‌WAS‌‌GIVEN‌B ‌ Y‌‌HIS‌
‌EMPLOYER‌‌P200,‌‌000‌‌FOR‌‌HIS‌ E‌ XPENSES‌‌DURING‌‌THE‌‌2019‌‌CHRISTMAS‌‌HOLIDAYS.‌ ‌ ‌

1.‌What‌‌is‌‌the‌‌final‌w ‌ ithholding‌‌tax‌‌on‌t‌ he‌f‌ ringe‌‌benefit? ‌ ‌ ‌


FBT‌‌=‌‌(Monetary‌‌Value‌‌of‌‌Fringe‌‌Benefit‌‌/‌‌65%) ‌‌x‌3‌ 5%‌ ‌
FBT‌‌=‌‌(200, ‌‌000‌‌/‌6‌ 5%) ‌x‌ ‌‌35%‌ ‌
FBT‌‌=‌3‌ 07, ‌692.3‌x‌ ‌‌35%‌ ‌
FBT‌‌=‌1‌ 07, ‌692‌ ‌

2.‌I‌f‌T‌ haddeus‌‌is‌‌a‌n
‌ on-resident‌‌alien‌‌not‌‌engaged‌‌in‌‌business‌‌in‌‌the‌‌Philippines,‌‌how‌‌much‌‌is‌‌the
grossed-up‌‌monetary‌‌value‌‌of‌‌the‌f‌ ringe‌‌benefit?‌ ‌ ‌
Monetary‌‌Value‌ ‌200, ‌000‌ ‌
Divide‌b
‌ y:‌ ‌ 75%‌ ‌
Grossed-up‌‌monetary‌v‌ alue‌ 266, ‌667‌ ‌

3.‌F‌ or‌‌each‌‌situation,‌‌prepare‌‌the‌‌necessary‌‌entry‌‌in‌‌the‌‌corporate‌‌books‌‌of‌a‌ ccounts.‌ ‌ ‌


Fringe‌B ‌ enefit‌E‌ xpense‌ ‌200, ‌000‌ ‌
Fringe‌B ‌ enefit‌T‌ ax‌‌Expense‌ 1‌ 07, ‌692‌ ‌
‌Cash‌ ‌307, ‌692‌ ‌

‌To‌‌record‌‌fringe‌b
‌ enefit‌e‌ xpense‌‌and‌‌fringe‌b‌ enefit‌‌tax‌‌paid‌‌on‌‌expenses‌‌during‌ ‌Christmas‌ ‌
holidays‌‌by‌‌the‌‌employer‌ ‌
Gross-up‌‌monetary‌‌value‌ 2‌ 66, ‌667‌ ‌
‌Cash‌ ‌266, ‌667‌ ‌
‌to‌‌record‌‌grossed-up‌‌monetary‌v‌ alue‌ ‌ ‌
 ‌
 THEODORE‌‌IS‌‌OCCUPYING‌‌SUPERVISORY‌P ‌ OSITION‌‌IN‌‌THE‌‌CERAMICS‌‌BUSINESS‌‌OWNED‌B ‌ Y‌‌MS.‌
‌MIRASOL.‌‌IN‌‌2019, ‌ THEODORE‌‌WAS‌‌GRANTED‌‌BY‌‌MS.‌‌MIRASOL‌‌HOUSING‌‌PRIVILEGE.‌A ‌ SSUME‌‌THE‌
‌GIVEN‌‌FIGURES‌‌WHENEVER‌‌NECESSARY‌ ‌
TO‌‌SOLVE‌‌THE‌‌REQUIREMENT.‌ ‌ ‌
MONTHLY‌‌RENTAL‌ ‌P20, 000‌ ‌
MARKET‌‌VALUE‌ ‌6, 000, ‌‌000‌ ‌
ZONAL‌‌VALUE‌ ‌5, ‌500, ‌000‌ ‌
ACQUISITION‌‌COST‌‌TO‌‌MS.‌‌MIRASOL‌ 5‌ , 0‌ 00, ‌000‌ ‌
ACQUISITION‌‌COST‌‌TO‌‌THEODORE‌ ‌4, ‌500, ‌000‌ ‌

1.‌I‌f‌‌the‌‌employer‌‌is‌‌leasing‌‌the‌‌house, ‌h
‌ ow‌‌much‌‌is‌‌the‌‌fringe‌‌benefit‌‌tax‌ ‌
 ‌
Monthly‌R ‌ ental‌ 2‌ 0, ‌000‌ ‌
Multiply‌‌by‌ ‌ 50%‌ ‌
Monetary‌‌Value‌ ‌10, ‌000‌ ‌
Divide‌b ‌ y‌ ‌65%‌ ‌
Grossed-up‌‌monetary‌v‌ alue‌ ‌15, ‌385‌ ‌
Multiply‌‌by:‌ ‌35%‌ ‌
Fringe‌b ‌ enefit‌‌tax‌‌due‌ ‌5, ‌385‌ ‌
 ‌
2.‌I‌f‌‌the‌‌employer‌‌purchased‌‌the‌‌house, ‌w ‌ hat‌‌is‌‌the‌‌monetary‌v‌ alue‌‌of‌‌the‌‌fringe‌b
‌ enefit?‌ ‌ ‌
Acquisition‌c‌ ost‌‌to‌‌Ms.‌‌Mirasol‌ ‌5, ‌000, ‌000‌ ‌
Multiply‌‌by‌ ‌ 5%‌ ‌
Annual‌‌Value‌ ‌250, 000‌ ‌
Multiply‌‌by‌ ‌ 50%‌ ‌
Monetary‌‌Value‌ 1‌ 25, ‌000‌ ‌

3.‌I‌f‌‌the‌‌employer‌‌purchased‌‌the‌‌house‌‌and‌‌title‌‌to‌‌ownership‌‌of‌‌the‌‌house‌‌was‌‌transferred‌a‌ t‌‌no‌c‌ ost‌‌in


the‌n ‌ ame‌‌of‌‌the‌‌employee,‌‌what‌‌is‌‌the‌‌grossed-up‌‌monetary‌‌value‌‌of‌t‌ he‌f‌ ringe‌‌benefit?‌ ‌ ‌
Monetary‌‌value‌ ‌5, ‌500, 0‌ 00‌ ‌
Divide‌b ‌ y‌ ‌65%‌ ‌
Grossed-up‌‌monetary‌v‌ alue‌ ‌8, ‌461, ‌538‌ ‌ ‌
 ‌
4.‌I‌f‌‌the‌‌employer‌‌purchased‌‌the‌‌house‌‌and‌‌transfers‌‌ownership‌‌to‌t‌ he‌‌employee‌a‌ t‌‌a‌‌cost, ‌what‌‌is‌‌the‌ ‌
fringe‌b ‌ enefit‌‌tax‌‌due? ‌ ‌ ‌
Market‌‌Value‌ 6‌ , 0‌ 00, ‌000‌ ‌
Less:‌C ‌ ost‌‌to‌e‌ mployee‌ ‌4,‌500, ‌000‌ ‌
Monetary‌‌value‌ ‌1, ‌500, 0‌ 00‌ ‌
Divide‌b ‌ y‌ ‌65%‌ ‌
Grossed-up‌‌monetary‌v‌ alue‌ 2, ‌‌307, ‌692‌ ‌
Multiply‌‌by:‌ ‌ 35%‌ ‌
Fringe‌b ‌ enefit‌‌tax‌‌due‌ ‌807, ‌692‌ ‌
 ‌
 ‌
  ‌
THERESE,‌‌SALES‌‌MANAGER‌‌OF‌‌PGA‌‌CARS,‌‌WAS‌‌PROVIDED‌B ‌ Y‌‌HER‌‌EMPLOYER‌‌A‌‌CAR‌‌IN‌‌2019.‌‌ASSUME‌
‌THE‌‌FOLLOWING‌ ‌FIGURES‌‌TO‌A ‌ NSWER‌‌THE‌‌REQUIREMENT.‌ ‌
CASH‌‌GIVEN‌‌TO‌‌THERESE‌‌TO‌‌OWN‌‌A‌‌CAR‌ P
‌ 500,‌0‌ 00‌ ‌
ACQUISITION‌‌COST,‌‌EXCLUSIVE‌‌OF‌‌INTEREST‌ 4‌ 50,‌‌000‌ ‌
PORTION‌‌OF‌‌ACQUISITION‌‌COST‌‌SHOULDERED‌B ‌ Y‌‌EMPLOYER‌ 3‌ 00,‌‌000‌ ‌ ‌

1.‌I‌f‌‌the‌‌employer‌‌gave‌‌Therese‌c‌ ash‌‌to‌‌purchase‌‌and‌‌own‌‌the‌c‌ ar,‌‌what‌‌is‌‌the‌m ‌ onetary‌‌value‌‌of‌‌the‌ ‌


fringe‌b ‌ enefit?‌ ‌
Monetary‌‌Value‌‌of‌t‌ he‌f‌ ringe‌‌benefit‌‌=‌C ‌ ash‌‌given‌‌to‌T‌ herese‌ ‌
Monetary‌‌Value‌‌of‌t‌ he‌f‌ ringe‌‌benefit‌‌=‌‌P500, ‌‌000‌ ‌
 ‌
‌2.‌‌If‌t‌ he‌‌employer‌‌purchased‌t‌ he‌c‌ ar‌‌on‌‌instalment‌‌under‌‌Therese's‌‌name,‌w ‌ hat‌‌is‌t‌ he‌f‌ ringe‌‌benefit‌ ‌
Tax?‌ ‌ ‌
 ‌
Acquisition‌c‌ ost, ‌‌exclusive‌‌of‌‌interest‌ 4‌ 50, ‌‌000‌ ‌
Divide‌b ‌ y:‌ ‌5‌ ‌ ‌
Monetary‌‌Value‌ 9‌ 0, ‌‌000‌ ‌
Divide‌b ‌ y:‌ ‌65%‌ ‌
Grossed-up‌‌monetary‌v‌ alue‌ ‌138, ‌‌462‌ ‌
Multiply‌‌by:‌ 3‌ 5%‌ ‌
Fringe‌b ‌ enefit‌‌tax‌‌due‌ ‌48, ‌‌462‌ ‌
 ‌
3.‌I‌f‌‌the‌‌purchase‌p ‌ rice‌‌of‌t‌ he‌c‌ ar‌‌was‌‌partially‌‌shouldered‌‌by‌‌the‌‌employer‌‌with‌T‌ herese‌b ‌ eing‌
‌the‌ ‌owner, ‌‌what‌‌is‌‌the‌g‌ rossed-up‌‌monetary‌‌value‌‌of‌‌the‌‌fringe‌‌benefit?‌ ‌
Monetary‌‌Value‌ ‌300, ‌‌000‌ ‌
Divide‌b ‌ y:‌ ‌ 65%‌ ‌
Gross-up‌‌monetary‌‌value‌ ‌461, ‌5‌ 38‌ ‌
 ‌
 ‌
 ‌
DOMINIQUE,‌‌DANIEL‌‌AND‌‌DAPHNE‌‌ARE‌‌DIRECTORS‌‌OF‌‌3D‌‌CORPORATION.‌‌THE‌‌CORPORATION‌
‌OWNS‌A ‌ ‌‌TOWN‌‌HOUSE.‌‌IN‌ ‌2019,‌‌THE‌P ‌ ROPERTY‌‌WAS‌‌FURNISHED‌‌DOMINIQUE‌A ‌ S‌‌HIS‌‌RESIDENCE.‌‌THE‌
‌FAIR‌‌MARKET‌‌VALUE‌‌OF‌‌THE‌‌PROPERTY‌‌IS‌ ‌P5,‌‌000,‌‌000‌‌WHILE‌‌ITS‌‌ZONAL‌‌VALUE,‌P
‌ 4,‌‌000,‌0‌ 00.‌‌THE‌
‌ACQUISITION‌‌COST‌‌SUBJECT‌‌TO‌‌DEPRECIATION‌‌OF‌‌THE‌‌TOWN‌ ‌HOUSE‌‌IS‌‌P3,‌5‌ 00,‌‌000.‌‌THE‌‌ESTIMATED‌
‌USEFUL‌‌LIFE‌‌OF‌‌THE‌‌PROPERTY‌‌IS‌‌15‌‌YEARS.‌ ‌ ‌

1.‌H
‌ ow‌‌is‌‌the‌‌amount‌‌to‌‌be‌‌amortized‌a‌ rrived‌‌at? ‌ ‌ ‌
Fair‌‌market‌‌value‌ ‌5, ‌‌000, ‌‌000‌ ‌
Acquisition‌C ‌ ost‌ 3‌ , ‌5‌ 00, ‌‌000‌ ‌
Amount‌‌to‌‌be‌‌amortized‌ ‌1, ‌‌500, ‌‌000‌ ‌

2.‌W
‌ hat‌‌is‌‌the‌‌annual‌‌amortization?‌ ‌ ‌
Amortization‌‌base‌ ‌P1,‌‌500,‌‌000‌ ‌
Divide‌b
‌ y:‌‌Estimated‌‌useful‌‌life‌ 1‌ 5‌‌years‌ ‌
Annual‌‌amortization‌ 1‌ 00,‌‌000‌ ‌

3.‌H
‌ ow‌m
‌ uch‌‌is‌t‌ he‌f‌ ringe‌‌benefit‌‌expense‌t‌ o‌‌be‌‌recognized‌‌for‌‌the‌‌year?‌ ‌ ‌
Annual‌‌Amortization‌ ‌100,‌‌000‌ ‌
Divide‌b
‌ y‌ 1‌ 2‌‌months‌ ‌ ‌
Fringe‌b
‌ enefit‌e‌ xpense‌ ‌8,‌‌333‌ ‌

4.‌W
‌ hat‌‌should‌‌be‌t‌ he‌‌entry‌‌in‌‌the‌‌books‌‌of‌‌the‌c‌ orporation?‌ ‌
Fringe‌B ‌ enefit‌E‌ xpense‌ ‌8,‌‌333‌ ‌
‌Income‌‌Constructively‌‌Realized‌ ‌8,‌‌333‌ ‌
‌to‌‌record‌‌fringe‌b
‌ enefit‌a‌ nd‌‌income‌c‌ onstructively‌‌realized‌‌from‌‌the‌‌use‌‌of‌c‌ ompany-owned‌ ‌
residential‌‌property‌f‌ urnished‌t‌ o‌‌employees‌ ‌

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