Week 2 Quiz

Quiz No.
1. Operations level strategy focuses on diversification of the business.

2. Strategy is a component of SAVANT Framework which states that tax managing firms adjust the timing of
transactions in expectation of tax changes.
3. Net Operating Loss (NOL) arises when taxable income is greater than allowable deductions for the taxable
period.
4. Competitors can react to expected tax changes.
5. Firms should not attempt to anticipate price effects resulting from tax changes.
6. For financial reporting purposes, excess MCIT over RCIT is recognized as deferred tax asset.
7. Cassano Corp attempts to minimize its tax costs by transforming transactions being considered into ones
with more favorable tax treatment. This pertains to Negotiating component of SAVANT Framework.
8. A key ingredient of any successful organization is a sound and successfully implemented strategy.
9. Based on the CREATE law, RCIT due starting July 2020 is 25% of its taxable income.
10. The tax incentives of PEZA registered entity depends whether the project is pioneer or non-pioneer.
11. IU Co. is a BOI registered entity and enjoying income tax holiday. During the year IU Co. realizes income
and expenses not related to its registered activities. Such income and expenses is still subject to 0% RCIT
since the said company is enjoying income tax holiday.
12. PSJ Corp. is a PEZA registered entity. For income tax purposes, the said corporation is subject to 5% GIT.
As part of its tax planning for the year 2020, certain expenses was reported as COGS instead of OPEX since
the tax accountant learned upon reviewing the nature of expenses that it is a more on a COGS rather than
OPEX. This is an example of Negotiating of SAVANT Framework.
13. Jungkook Co.’s practice of claiming input VAT for purchase of services is upon accrual or recording of
expense. For purposes of tax planning:
a. Jungkook Co. should change its practice without considering the effect on the company’s
financials as whole.
b. Jungkook Co. should analyze the breakdown of prepaid expenses and check possible advanced
payments in which input VAT can be claimed upon payment to lower its VAT payable for the
quarter.
c. Jungkook Co. should not check possible opportunity to reduce its VAT payable.
14. Which of the following pertains taking advantage of corporate and business strengths in global markers:
a. Corporate level strategy
b. Operations level strategy
c. International level strategy
15. Which of the following scenario best describes Anticipation of SAVANT Framework:
a. Ina Magenta Co. is planning to sell its investment at fair value through profit or loss. The
company anticipates that it will be sold at a gain. Hence for tax planning for the year 2020, in
anticipation of the CREATE Bill, Ina Magenta decided to sell the said investment in 2021 due to a
lower tax rate.
b. Brader Eli Corp. is a holding company and plans to acquire various entities that reported DTA
arising from NOLCO to make use the benefit of NOLCO.
c. Hazel is the tax accountant of Prinsipe K Co. looks for various expenses that can be treated as
cost of sales instead of operating expenses to lower its GIT due.
16. Yoongi, Seokjin and Hoseok are siblings. They inherited a land from its parent situated in Samal Bataan.
However, the title of the said land was not transferred in their name. Namjoon, their cousin, who is also
an accountant advises them to process the transfer of title since estate tax amnesty is up to June of 2021
only. For tax planning, this is an example of:
a. Value-adding
b. Strategy
c. Anticipation
17. Army Co. has various transactions to its related party during the year as disclosed in its audited financial
statement. Hobi is an accountant on the said company. He was asked to check possible tax issues on these
transactions. Hobi should most likely:
a. Check the salaries expense to check for possible disallowance for income tax purposes.
b. Check the practice of forex of the company.
c. Check DST impact on the amounts recorded as due to and due from.
18. For income tax reconciliation purposes, interest income subject to final tax is:
a. Deducted from accounting income
b. Added back to accounting income
c. Ignored
19. Lisa Corporation reported huge amount of Input VAT as of the year ended December 31, 2020. For tax
planning purposes, the accountant may recommend:
a. To refund the excess input VAT allocable to exempt sales.
b. To refund the excess input VAT allocable to zero-rated sales.
c. To refund the excess input VAT allocable to vatable sales.
20. Vincenzo Corporation is a PEZA registered entity. For tax planning purposes, the accountant most likely to
recommend:
a. Not to revisit its current practice.
b. Revisiting fixed asset policy for the expenses capitalizable as asset.
c. Revisiting the practice of allocation of expenses to registered and non-registered activity.
21. Hong Co. recognized gain from forex transactions. To be taxable for income tax purposes the gain should
be:
a. Unrealized
b. Realized
c. Either Unrealized or Realized, any gain arises from forex transaction is taxable.
22. Bogum reported asset retirement obligation under PPE in its AFS. For income tax purposes, accretion is:
a. Deductible
b. Not deductible, hence, deducted from accounting profit
c. Not deductible, hence, added back to accounting profit
23. Gongyoo Corp (lessee) entered into lease agreement with Joongki Corp. (lessor) For income tax purposes,
the amount deductible in Joongki Corp’s Annual ITR related to lease is:
a. The amount paid by Gongyoo Corp
b. The amount of rent expense computed using straight line basis
c. The amount of cost in executing the contract
24. Donghae Co. wants to lower its RCIT due for the year 2020. The Company decided to make various
donations as part of its CSR. To be a valid, donation must be:
a. Evident by invoice
b. Substantiated with valid certificate of donation
c. Donated to the government agency only.
25. The general rule on the deductibility of expenses for income tax purposes is:
a. Properly substantiated only
b. Ordinary and necessary only
c. Ordinary and necessary and must be properly substantiated

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Quiz No.

1. Operations level strategy focuses on diversification of the business.

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