Leer Corporation’s pretax income in 20x7 was P100,000. The temporary differences between amounts reported in the financial statements and the tax return are as follows;  Depreciation in the financial statements was P8,000 more than the tax depreciation.  The equity method of accounting resulting in financial statement income of P35,000. A P25,000 dividend was received during the year, which is eligible for the 80% dividends received deduction. Leer’s effective income tax rate was 30% in 20x7. In its 20x7 income statement, Leer should report a current provision for income taxes of __________.

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A: Given:

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.