|On August 1, Jungkook and Jimin pooled their assets to form a partnership, with the firm to take over their business assets and assume the liabilities. Partners capitals are to be based on the net assets transferred after the following adjustments. Jungkook's inventory is to be increased by P4,000; allowance for doubtful accounts are P1,000 and P1,500 are to be set up in the books of Jungkook and Jimin, respectively; and accounts payable of P4,000 is to be recognized in Jungkook's books. The individual trial balance on August 1, before adjustments, follow: Jimin Jungkook 85,000 5,000 115,000 36,700 Assets Liabilities

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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.