Practice question
A furniture dealer sells a table carried in its sale inventory. The dealer calls it a capital asset because it is valuable and durable. Which classification applies?
- Capital, because all durable goods are capital assets.
- Capital, because inventory can never be ordinary.
- Capital, if the buyer pays cash.
- Ordinary, because inventory is excluded from capital assets.
- Exempt, because furniture is movable.
Legal references
- NIRC, Section 39(A)(1); https://lawphil.net/statutes/repacts/ra1997/ra_8424_1997.html
- Revenue Regulations 7-2003, Section 2; https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/10/40237
Answer this question in flashcards to review your response and continue practicing.