AUDIT OF INCOME FROM SALE OF ASSET
- Identify in the tax returns and financial statements any sale, exchange or disposal of assets other than inventories or stocks in trade.
- Obtain copies of deeds of sale and other documents relating to the sale.
- Determine zonal values, fair market values or appraisal values and compare with the actual selling price.
- Compute any under declaration of sales by comparing the selling price with the existing fair market value, zonal value or value of similar properties sold.
- In case of disposal of capital assets, ascertain compliance with the provisions of the Tax Code on capital gains and losses.
- Verify sales of property reported on the installment basis and determine if all requirements pertaining thereto have been complied with.
- Determine if proper accounting for depreciation, book value and salvage value was correctly taken up.
- Inquire from certain company personnel on possible sales of assets which may not have been recorded in the books of accounts.
Reference: RAMO 1-2000