Answered: ential house and lot located in Manila…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Kaye sold his residential house and lot located in Manila on January 5, 2018 for 8,000,000. The property was purchased in 2005 for 3,000,000. The current market value of the property at the time of sale was:

BIR Commissioner’s zonal valuation 9,000,000
City Assessor’s schedule of values 6,000,000

What is the capital gains tax on the sale?

300,000

360,000

480,000

540,000

Definition Definition Tax imposed by the government on the "gain" or increase in the value of an asset at the time of its sale by the owner. Capital gain is computed based on the purchase price and sale price of the asset. If the sale price of the asset is more than the purchase price, there is a gain on the sale of asset. A tax is imposed on such gain in accordance with the applicable tax rates at the time of sale.

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