Practice question
A manufacturer sells machinery used in its business and of a character subject to the statutory depreciation allowance. Which is correct under Section 39(A)(1)?
- It is capital merely because it appeared under fixed assets.
- It is capital because the seller is not a machinery dealer.
- It is exempt because the seller used it.
- It is capital if it was expensive.
- It is excluded from capital assets because of its depreciable business-use character.
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.