13. The Resty Company issued 200,000 new P1 ordinary shares at a fair value of P1.80 each. Resty identified the following costs in relation to the share issue: Professional fees of P40,000. Internal management time in managing the process of P30,000. These costs are deductible in arriving at the entity's income tax liability. The current rate of tax is 30%. In accordance with PAS32 Financial instruments: presentation, the increase in equity in the statement of financial position of Resty as a result of the transaction will be Group of answer choices P332,000 P311,000 P360,000 P320,000

13. The Resty Company issued 200,000 new P1 ordinary shares at a fair value of P1.80 each. Resty identified the following costs in relation to the share issue: Professional fees of P40,000. Internal management time in managing the process of P30,000. These costs are deductible in arriving at the entity's income tax liability. The current rate of tax is 30%. In accordance with PAS32 Financial instruments: presentation, the increase in equity in the statement of financial position of Resty as a result of the transaction will be Group of answer choices P332,000 P311,000 P360,000 P320,000

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter18: Comparative Forms Of Doing Business

Section: Chapter Questions

Problem 16P

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The Resty Company issued 200,000 new P1 ordinary shares at a fair value of P1.80 each. Resty identified the following costs in relation to the share issue:• Professional fees of P40,000.• Internal management time in managing the process of P30,000. These costs are deductible in arriving at the entity's income tax liability. The current rate of tax is 30%. In accordance with PAS32 Financial instruments: presentation, the increase in equity in the statement of financial position of Resty as a result of the transaction will beA. P332,000 B. P320.000 C. P360,000 D. P311,000
The Resty Company issued 200,000 new P1 ordinary shares at a fair value of P1.80each. Resty identified the following costs in relation to the share issue: Professional fees of P40,000. Internal management time in managing the process of P30,000.These costs are deductible in arriving at the entity’s income tax liability. Thecurrent rate of tax is 30%.In accordance with PAS32 Financial instruments: presentation, the increase inequity in the statement of financial position of Resty as a result of the transactionwill bea. P360,000b. P332,000c. P320,000d. P311,000
Assume the following independent cases:A. At the beginning of the year, a check was issued for P400,000 as payment for a piece of land, and the buyer assumed the liability for the unpaid taxes at the end of the year, P10,000 and those assessed for the current year at P9,000.B. A company issued 14,000 ordinary shares (P10 par) with a market value of P60 per share (based upon a recent sale of 100 shares) for the land. The land was recently appraised at P800,000 by independent and competent appraisers.C. A company rejected an offer to purchase the land for P8,000,000 cash two years ago. Instead, the company issued 100,000 ordinary shares for the land (market value of the ordinary share, P78 each based on several recent large transactions and normal weekly stock trading volume).D. A company purchased land by signing a note with the seller, requiring P100,000 down payment, payment of P120,000 one year from purchase, and P80,000 three years from purchase. The note is non-interest bearing,…
4.Assume the following independent cases: (a) At the beginning of the year, a check was issued for P400,000 as payment for a piece of land and the buyer assumed the liability for unpaid taxes in arrears for the previous year, P10,000 and those assessed for the current year, P9,000.(b) A company issued 14,000 ordinary shares (P50 par) with a market value of P60 per share (based upon a recent sale of 100 shares) for the land. The land was recently appraised at P800,000 by independent and professional appraisers.(c) A company rejected an offer to purchase the land for P8,000,000 cash two years ago. Instead, the company issued 100,000 ordinary shares for the land (market value of the ordinary share, P78 each based on several recent large transactions and normal weekly stock trading volume).How much is the cost of land acquired in (a), (b), and (c), respectively? a. 419,000; 800,000; 7,800,000 b. 410,000; 800,000; 7,800,000 c. 410,000; 840,000; 7,800,000 d. 419,000; 840,000;…
Assume the following independent cases: (a) At the beginning of the year, a check was issued for P400,000 as payment for a piece of land and the buyer assumed the liability for unpaid taxes in arrears for the previous year, P10,000 and those assessed for the current year, P9,000.(b) A company issued 14,000 ordinary shares (P50 par) with a market value of P60 per share (based upon a recent sale of 100 shares) for the land. The land was recently appraised at P800,000 by independent and professional appraisers.(c) A company rejected an offer to purchase the land for P8,000,000 cash two years ago. Instead, the company issued 100,000 ordinary shares for the land (market value of the ordinary share, P78 each based on several recent large transactions and normal weekly stock trading volume).How much is the cost of land acquired in (a), (b), and (c), respectively? a. 419,000; 800,000; 7,800,000 b. 410,000; 800,000; 7,800,000 c. 410,000; 840,000; 7,800,000 d. 419,000; 840,000;…
On 1 January 2020, Investor Ltd paid $1,100,000 for a 25% interest in Associate Ltd when the equity of Associate Ltd consisted of $3,000,000 share capital and $1,200,000 retained earnings. There has been no change in share capital of Associate Ltd since then. Both firms' accounting period is from 1 January to 31 December and their income tax rate is 30%. On this date, all the identifiable net assets of Associate Ltd were recorded at fair value except for the following: Fair value Carrying amount Status Inventory $ 400,000 $ 600,000 Sold in 2020 Machinery (net) 900,000 500,000 5-year life Equipment (net) 70,000 150,000 4-year life Additional information: Associate Ltd has no dividend declared or paid during 2020. Associate Ltd's financial statements show that retained earnings were $1,500,000 as at 1 January 2021, and profit and dividend were $190,000 and $10,000, respectively, for 2021. On 15 November 2021, Associate Ltd sold inventory to Investor Ltd at a profit before income tax…
On 1 January 2020, Investor Ltd paid $1,100,000 for a 25% interest in Associate Ltd when the equity of Associate Ltd consisted of $3,000,000 share capital and $1,200,000 retained earnings. There has been no change in share capital of Associate Ltd since then. Both firms' accounting period is from 1 January to 31 December and their income tax rate is 30%. On this date, all the identifiable net assets of Associate Ltd were recorded at fair value except for the following: Fair value Carrying amount Status Inventory $ 400,000 $ 600,000 Sold in 2020 Machinery (net) 900,000 500,000 5-year life Equipment (net) 70,000 150,000 4-year life Additional information: Associate Ltd has no dividend declared or paid during 2020. Associate Ltd's financial statements show that retained earnings were $1,500,000 as at 1 January 2021, and profit and dividend were $190,000 and $10,000, respectively, for 2021. On 15 November 2021, Associate Ltd sold inventory to Investor Ltd at a profit before income tax…
2 An entity reports profit before bonus and taxes of P1,800.0m during the year. The entity has an established policy of paying its top management a 12% bonus on annual profit. The entity is subject to an income tax rate of 30%. Requirements: Compute for the amount of bonus under each of the following bonus schemes: a. Bonus is based on profit before deducting bonus and income tax. b. Bonus is based on profit after deducting bonus but before deducting income tax. C. Bonus is based on profit before deducting bonus but after deducting income tax. d. Bonus is based on profit after deducting both bonus and income tax.
6. On January 1, 2020, PQR Company purchased 40,000 shares of Frank, Inc. at P100 per share. The investment is measured at fair value through other comprehensive income. Brokerage fees amounted to P120,000 were also paid by PQR. A P5 dividend per share was declared by Frank, Inc. on December 15, 2019, to be paid on March 31, 2020 to shareholders of record on January 31, 2020. What is the initial measurement of the investment in Frank, Inc.?
5. XYZ Pty Ltd had the following transactions relevant to its franking account during the year ended 30 June 2021. It pays tax at the rate of 30%. On the 1st July 2020 its franking account balance was $10,000 On 10 July 2020 it paid a dividend of $50,000 franked to 70% to its shareholders On the 30th July it paid Company Income Tax of $60,000. On 1 August 2020 it paid a dividend of $50,000 franked to 50% to its shareholders. Then on 1 March 2021 it paid a dividend of $30,000 franked to 90% to its shareholders. Required: Only advise on the consequences for XYZ Pty Limited NOT its shareholders.
Taballa Ltd owns all the share capital of Amaroo Ltd. The income tax rate is 30%. The following transactions took place during the periods ended 30 June 2023 or 30 June 2024. (a) On 1 May 2023, Amaroo Ltd sold inventories costing $600 to Taballa Ltd for $1 200 on credit. On 30 June 2023, only half of these goods had been sold by Taballa Ltd, and Taballa Ltd had paid $600 to Amaroo Ltd. All remaining inventories were sold to external entities by 30 June 2024 and Taballa Ltd paid the outstanding amount to Amaroo Ltd on 5 May 2024. (b) On 1 January 2023, Taballa Ltd sold an item of plant to Amaroo Ltd for $10 000. Immediately before the sale, Taballa Ltd had the item of plant on its accounts for $ 12 000. Taballa Ltd depreciated items at 5% p. a. on the diminishing balance and Amaroo Ltd used the straight-line method over 10 years. (c) An inventories item with a cost of $4 000 was sold by Taballa Ltd to Amaroo Ltd for $3 600 on 1 January 2024. Amaroo Ltd intended to use this item as…
On January 1, 20x1, ABC Co. purchased 1,000 shares of XYZ, Inc. for ₱250,000. Commission paid to brokeramounted to ₱10,000. The equity securities were designated by management to be measured at fair valuethrough profit or loss. On December 31, 20x1, the shares are quoted at ₱200 per share. It was estimated thatthe transaction cost of ₱20 per share will be incurred if the shares were sold on that date. 1. How much is the unrealized gain (loss) on change in fair value recognized in the 20x1 profit or loss?2. On January 3, 20x2, all the shares were sold at ₱300 per share. Commission paid for the sale amountedto ₱60,000. How much is the realized gain (loss) from the sale?3. If ABC Co. uses an allowance account to account for changes in fair values, how much is the balance ofthis account on December 31, 20x1?