Compute VAT for each Corporations.
Explanation of Solution
VAT: Value-Added-Tax (VAT) is a kind of tax that is levied on the incremental value of the goods under process in any stage of production.
In this it is required to find out the value added to the entertainment videos by each of the Incorporation and compute the VAT on those value.
Calculate the value added by Incorporation Q and the VAT on it, as follows;
Calculate the value added by Incorporation R and VAT on it, as follows;
Therefore, the VAT for Incorporation Q and Incorporation R is $1,116,000 and $372,000 respectively.
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Chapter 1 Solutions
PRINCIPLES OF TAXATION F/BUS...(LL)
- Zilong Company operates a customer loyalty program. The entity grants program members loyalty points when they spend a specified amount on purchases. Program members can redeem the points for further purchases. The points have no expiry date. During 2021 the entity granted 80,000 points. Management expects that 90% of these points will be redeemed. The fair value of each loyalty point is estimated at P20. The sales during 2021 amounted to P9,000,000 including loyalty points. On December 31, 2021, 28,800 points have been redeemed in exchange for purchases. In 2022 the management revised its expectations and expects 85% of the points to be redeemed altogether. During 2022, the entity redeemed 12,000 points. What is the revenue earned from loyalty points for the year ended December 31, 2021?arrow_forwardFlatland Corp. harvested potatoes at a cost of FC 1,000,000 and sold them to Pot Corp. for FC 2,500,000. Pot Corp. sold the potatoes to its customers and received FC 4,000,000. If the national VAT is 20%, how much tax did Pot Corp. pay?arrow_forwardIntegrity Company sold consumer products that are packaged in boxes. The entity offered an unbreakable glass in exchange for two box tops as a promotion during the current year. The cost of the glass was P200. The company sold 200,000 boxes of the product and 40,000 box tops were redeemed during the year. The entity estimated at the end of the year that it would be probable that 50% of the box will be redeemed. The allocated transaction price for the premium is P5,000,000.How much is the Unearned Revenue for Unredeemed Premiums?arrow_forward
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