Problem 1

A company has an interest expense worth P 1,500,000. The tax rate is 40%. Compute the after-tax cost of the interest expense.

Problem 2

The after-tax cost of interest expense is P 910,000. How much is the total cost of the interest expense assuming the tax rate is 25%?

Problem 3

A newly established domestic corporation is has the following data:

Net Sales 2,100,000

Cost of Sales 1,150,000

Itemized Deduction 850,000

How much is the income tax payable of the corporation?

Problem 4

A corporation started its operation in the year 2012. The following are the corporation's results of operations.

2017 2018 2019 2020

Net Sales 3,000,000 1,500,000 4,500,000 6,000,000

Cost of Sales 1,500,000 1,200,000 2,600,000 3,500,000

Itemized Deduction 500,000 400,000 1,550,000 850,000

How much is the income tax payable of the corporation?

Identification.

1. It represents the system by which corporations are managed and controlled.
2. It is the appropriate goal in governing a firm.
3. A partner whose liability is limited to his capital contribution.
4. MCIT is applicable to the companies in its ___ year of operations.
5. It concerns the acquisition, financing and management of assets with some overall goal in mind.
6. A business outlook that acknowledges a firm's responsibilities to its stakeholders and the natural environment.
7. Represents the systematic allocation of the cost of capital asset over a period of time for financial reporting purposes, tax purposes or both.
8. Generated from the sale of assets that are not used in the ordinary course of business.
9. Individuals that are taxed in their income from within and without the Philippines.
10. A goal involving maximizing a firm's earnings after taxes.
11. It is a branch of economics relating to the behavior of principals and agents.
12. A business form that provides its owners with corporate-style limited personal liability and the federal-tax treatment of a partnership.
13. "A peso today is worth more than a peso tomorrow".
14. Method of depreciation that considers the residual value of the asset only at the end of its useful life.
15. The net operating loss of a company can be carried over to __ consecutive years when the company has net operating gain.
16. An individual authorized to act on behalf of another.
17. Meeting the needs of the present without compromising the ability of future generations to meet their own needs.
18. A goal that does not specify the timing or duration of expected returns.
19. Composed of all institutions and procedures for bringing buyer and sellers of financial instruments together.
20. A unit that has excessive savings is called.
21. A market where newly issued securities flow.
22. The most important decision in financial management.
23. His function involves making investment, financing and asset management decisions.
24. A market for unlisted securities.
25. A type of market where long-term securities flow.
26. An expense which is considered to have a tax advantage.
27. One of their responsibilities is to oversee the performance of management.
28. The current tax law here in the Philippines. (Don't use abbreviation)
29. A corporation that is under the legislation of another country but has a license to do business here in the Philippines.
30. They buy securities in bulk and sell them in retail.