Answered: Juan, a non-resident Filipino, sold his…

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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Juan, a non-resident Filipino, sold his stocks in San Gabriel, Inc., a domestic corporation, directly to buyer and received P200,000 cash plus a car with fair value of P100,000. The car has a depreciated value of 90,000 and was previously bought by the owner for P500,000. The shares sold by Juan were inherited by him. The fair value of the stocks at the time of inheritance was P50,000. The fair value of the stocks at the time of sale was P90,000. Compute the capital gains tax:

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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