Solution manual transfer and business taxes by valencia CHAPTER 8 BUSINESS TRANSACTIONS

BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS)
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Chapter 8: BUSINESS TRANSACTIONS

CHAPTER 8

BUSINESS TRANSACTIONS
Problem 8–1
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

False – Some business transactions are VAT-exempt.
True
True
True
True
True
False – Zero rated sales are applicable only to VAT-registered business/person.
True
True

False – Sales of non-VAT person, exceeding P1,500,000 per year is also subject to VAT.

Problem 8–2
1. True
2. False – The exemption pertains only to Output VAT.
3. False – Zero VAT transactions are not applicable for non-VAT registered persons.
4. False – Some VAT taxable transactions have no Input VAT especially if the supplier is a nonVAT person.
5. False – Exempt from business tax because it is considered as a subsistence livelihood.
6. True
7. False – Exempt from VAT.
8. False – zero VAT.
9. False – VAT-exempt.
10. True
Problem 8 – 3
1. B
2. D
3. C
4. B
5. C
6. A
7. C
8. C

Problem 8-4
1. B
2. B
3. A
4. B
5. C
6. A

7. C
8. B

Problem 8 – 5
C
Domestic sales
Importation of goods
Total VAT taxable transactions
Problem 8 – 6
C
Output VAT from collections (P4,480,000/9.3333)
Input VAT from supplies used (P560,000/9.3333)
VAT payable
Problem 8 – 7
D
No zero-rated transactions because the taxpayer is non-VAT.

P2,000,000
500,000
P2,500,000
P480.000
60,000
P420,000


BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS)
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Chapter 8: BUSINESS TRANSACTIONS

Problem 8 – 8
C
Output VAT (P2,000,000 + P12,000,000) x 12%

P1,680,000

The output VAT is the net VAT payable because the business is non-VAT, hence, no input VAT is
allowed.
Problem 8 – 9
A
Passenger by sea
Cargo by land
Cargo by sea
Total VAT taxable transactions
Problem 8 – 10
C
Domestic sales
Importation of goods
VAT taxable transactions
Problem 8 – 11
Export sales

1,500,000
500,000
500,000
P2,500,000
P 500,000
100,000

P 600,000

C
P1,000,000

Problem 8 – 12
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

Percentage tax (P112,000/1.12) x 3%

P 3,000

Output VAT (P112,000/9.3333)
Surcharge (P12,000 x 50%)
Business tax liability of Y

12,000
6,000
P21,000

Problem 8 – 13
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

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
.

Total income tax withheld (P1,684,905 x 1%)

P16,849

3
.

Total final VAT withheld (P1,684,905 x 5%)

P84,245

Problem 8 – 14
1
VAT-registered
.
Transport of passengers by sea
Transport of cargoes by:
Land
Sea

P2,000,000
500,000
1,000,000


BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS)
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Chapter 8: BUSINESS TRANSACTIONS

VAT taxable transactions
2
.

P3,500,000

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

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 – 15
1
VAT-registered
.
From radio ads
From TV ads
VAT taxable transactions
2
.

P 5,000,000
6,000,000
P11,000,000

Non-VAT registered
From radio ads
From TV ads
VAT taxable transactions

P 5,000,000
6,000,000
P11,000,000

Note: A non-VAT registered franchise grantees of radio and television broadcasting with annual
gross receipts of more than P10,000,000 is subject to VAT.
Problem 8 – 16
Output VAT – Zero rated because foreign denominated sales
Input VAT (P336,000/9.3333)
VAT refund

P - 0 ( 36,000)
(P 36,000)

Problem 8 – 17
Domestic sales to various VAT person
Domestic sales to various non-VAT person
VAT taxable transactions against X

P 800,000
600,000
P1,400,000

Problem 8 – 18
1
P -0.
The business is non-VAT and total sales do not exceed P1,500,000/year
2
.

P -0No zero-VAT sale is allowed for a non-VAT business.

3
.

Domestic sales to various VAT persons

P 50,000

Domestic sales to various non-VAT persons
Export sales denominated in foreign currency
Total VAT-exempt sales

100,000
200,000
P350,000


BUSINESS AND TRANSFER TAXATION 5th Edition (BY: VALENCIA & ROXAS)
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Chapter 8: BUSINESS TRANSACTIONS

Problem 8 – 19
1
VAT-registered
.

Domestic sales
Export sales
Total value of sales allowed with creditable Input VAT
2
.

P 2,000,000
2,000,000
3,000,000
P 5,000,000

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 2,000,000
P

- 0 -

P 3,000,000