Answered: HOULD BE PHILIPPINES BASED 1. What are…

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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SHOULD BE PHILIPPINES BASED 1. What are the ordinary and capital assets? 2. Enumerate the two types of capital assets subject to capital gains tax. 3. What are the transaction considered as "other disposition" of domestic stocks? What transactions are not considered as "other dispositions? 4. Discuss the rules on tax basis of stocks acquired by purchase, inheritance, donation, for inadequate consideration, and other tax-free exchange.

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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