1.   Required:
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3. Assuming Magsasaka treats its biological assets as inventory for tax purposes, determine the deductible ordinary and necessary expenses (as farmer) for the year ended December 31, 20A1. Please take note that this is Philippine Taxation.  .

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Magsasaka, Inc. is engaged in agriculture business. Its profit and loss statement prepared in accordance with PFRS for the year ended December 31, 20A1 provides in part as follows: Cost of sales . Inventories sold Depreciation and amortization Freight, trucking and handling Communication, light and water Personnel expenses Repairs and maintenance Rentals Others Total Selling and administrative expenses Personnel expenses Depreciation and amortization Contracted services Advertising and promotions Freight, trucking and handling Communication, light and water Repairs and maintenance Rentals Management fees Taxes and licenses Professional fees Pensions Insurance Supplies Others P20,000,000 5,350,000 5,000,000 4,500,000 3,500,000 3,000,000 2,500,000 1,750,000 P3,700,000 3,250,000 2,850,000 2,500,000 2,300,000 2,000,000 1,650,000 1,500,000 1,400,000 1,200,000 1,000,000 800,000 750,000 520,000 1,150,000 The following are the additional information: Cost of inventories sold pertains to cost of finished goods of agricultural produce, and cost of raw materials, feeds and feed ingredients. Out of the total cost, P4,150,000 pertains to fair value of agricultural produce less costs to sell. Depreciation and amortization under cost of sales pertain to building, improvements, furniture and fixtures, and farm machines and equipment of P3,800,000, and breeding animals of P1,550,000 directly used in connection with the production of agricultural produce sold. Magsasaka, Inc. is engaged in agriculture business. Its profit and loss statement prepared in accordance with PFRS for the year ended December 31, 20A1 provides in part as follows: Cost of sales . Inventories sold Depreciation and amortization Freight, trucking and handling Communication, light and water Personnel expenses Repairs and maintenance Rentals Others Total Selling and administrative expenses Personnel expenses Depreciation and amortization Contracted services Advertising and promotions Freight, trucking and handling Communication, light and water Repairs and maintenance Rentals Management fees Taxes and licenses Professional fees Pensions Insurance Supplies Others P20,000,000 5,350,000 5,000,000 4,500,000 3,500,000 3,000,000 2,500,000 1,750,000 P3,700,000 3,250,000 2,850,000 2,500,000 2,300,000 2,000,000 1,650,000 1,500,000 1,400,000 1,200,000 1,000,000 800,000 750,000 520,000 1,150,000 The following are the additional information: Cost of inventories sold pertains to cost of finished goods of agricultural produce, and cost of raw materials, feeds and feed ingredients. Out of the total cost, P4,150,000 pertains to fair value of agricultural produce less costs to sell. Depreciation and amortization under cost of sales pertain to building, improvements, furniture and fixtures, and farm machines and equipment of P3,800,000, and breeding animals of P1,550,000 directly used in connection with the production of agricultural produce sold.

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In Philippine taxation for agricultural businesses that treat biological assets as inventory the deductible ordinary and necessary expenses include 1 ... View the full answer