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- LO.2 In 2019, Chaya Corporation, an accrual basis, calendar year taxpayer, provided services to clients and earned 25,000. The clients signed notes receivable to Chaya that have a fair market value of 22,000 at year-end. In addition, Chaya sold a 36-month service contract on June 1, 2019, and received payment in full of 12,000. How much gross income does Chaya report from these transactions in 2019?On 15 June 2008, D borrowed P50,000 from C. The debt is evidenced by a promissory note signed by D, as principal debtor, and by G, as guarantor, by virtue of which it was promised that the entire debt shall be paid on 15 June 2012. When the note matured, P, a third person, paid the entire debt of P50,000.00 to C. The payment was made with the consent of D. What are the rights of P as a result of the payment?T borrows $100,000 from the bank in Year 1, which he agrees to repay in Year 2. Whenthe debt becomes due in Year 2, the bank agrees to release T from liability if hepays $80,000.a. T realizes $100,000 of income in Year 1.b. T realizes $20,000 of income from the cancellation of debt in Year 2.c. T realizes $20,000 of ordinary income as compensation for services in Year 2 ifthe cancellation of debt was intended to satisfy the bank’s obligation to pay Tfor services.d. Both a and b.e. Either b or c, depending on the circumstances. T buys a parcel of real estate for $100,000, which he finances by giving the seller a nonrecoursemortgage for the full purchase price. The debt is due in one balloon payment inYear 5. When the debt becomes due in Year 5, T decides to give the property back to theseller in satisfaction of the debt (the property is worth only $50,000 at that time).a. T will realize $100,000 of income in Year 1 because the debt was non-recourse.b. T will realize no income in Year…
- A, B and C are solidary debtors to X and Y (solidary creditors) in the amount of PhP600,000.00. 1. How much is the liability of each solidary debtor to each of the solidary creditor? Explain your answer. 2. Assuming solidary debtor A paid solidary creditor X, what is the effect on the obligation? What is the right acquired by solidary debtor A after complying with the obligation? On the other hand, what is the obligation of solidary creditor X to the other creditor? EXPLAIN YOUR ANSWERS.On October 31, 20x4, Mr. Cruz bought properly from D'Vision Heights which had earlier cost the latter P250,000. The company received a dwon payment of P100,000 an a P400,0000 mortgage note payable in twenty equal semiannual installments plus 16% interest per annum an unpaid principal. Assuming the gross profit is recognized in the period of sale, the amount of gross profit to be recognized by D'Vision Heights in 20x6 would a. P 50,000 b. P 250,000Mr. Zang is a 5-6 lender. During the year, he granted loans totaling P 2M and collected P400,000 in interest. He also earned P 8,000 in temporary investments in domestic bonds plus additional P 6,000 from bank deposit substitutes. Direct cost of lending was P100,000. What is the total amount to be reported in gross income subject to regular tax?* a. 406,000 b. 300,000 c. 414,000 d. 308,000
- D is indebted to C for P10,000 due on March 31, 2022. To secure the fulfillment thereof, D endorsed a negotiable promissory note executed by P for P15,000 due on January 31, 2022. In this case,a. The pledge is void since the promissory note would be due earlier than the obligation it secures.b. D will collect the P15,000 on January 31, 2022 and pay C with the proceeds of the collectionc. C may collect the proceeds of the note and apply the P15,000 for the payment of D’s obligationd. C may collect the proceeds of the note and applyP10,000 for the payment of D’s obligation and return the excess P5,000 to D.Mary received a Form 1099-C with $15,000 in box 2 from her credit card company. Her Insolvency Worksheet indicated that Mary was insolvent prior to the cancellation of debt by $8,000. To fill out the Basis (Cost) of Assets Worksheet, what information will she need? The cost basis immediately after the debt cancellation. The cost basis immediately before the debt cancellation. The fair market value (FMV) immediately after the debt cancellation. The fair market value (FMV) immediately before the debt cancellation. Mark for follow upA, B and C are solidary debtors of W and Y, solidary creditors for P 12,000 where the share of the debtors in the obligation is 2:3:5 while the share of the creditors is 1:2. If B is a minor, which of the following is correct? a. W can collect from C P8,400 b. Y can collect from C P8,000 c. W or Y can collect from C P12,000 d. The insolvency of A will be shouldered by B and C in proportion to their respective obligations
- A, B and C are solidary debtors of W and Y, joint creditors for P 12,000 where the share of the debtors in the obligation is 2:3:5 while the share of the creditors is 1:2. If A is insolvent, which of the following is correct? a. W or Y can collect from B and C P12,000 b. Y can collect from either B or C P8,000 c. Y can collect from C P6,400 d. W can collect from B P3,200On January 1, 20x1, Diminished Co. paid cash down payment of P400,000 and issued a noninterest bearing note of P1,800,000 in exchange for a piece of land. The note is due in three equal annual installments every December 31. Case 1: The land has a fair value of P2,000,000. Provide entry on initial recognition. Case 2: The fair value of the land cannot be determined reliably. The prevailing market rate of interest for similar debt instruments in 9% . Provide the journal entry on initial recognition and the entries for the subsequent payments on the note.On October 31 , 20x4 , Mr . Cruz bought property from D'Vision Heights which had earlier cost the latter P250,000 . The company received a down payment of P100.000 and a P400,000 mortgage note payable in twenty equal semiannual installments plus 16 % interest per annum on unpaid principal . Assuming the gross profit is recognized in the period of sole of gross profit to be recognized by D'Vision Heights in 20x6 would be :
