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WorksheetsTM428C Midterm Exam
Total questions: 55
Worksheet time: 1hrs 11mins
The following are no sale transactions, except:
Free consignments, like, gifts, samples and promotional items
Goods imported on consignments
Goods imported by intermediaries, who do not purchase the goods and who sell them after importation
Goods imported by offices that are separate entities
All of the following are conditions under which the buyer and the seller are considered related for customs purposes, except:
They are officers or directors of one another’s business.
They are legally recognized partners in business.
Any person directly or indirectly owns, controls, or holds five percent (5%) or more of the outstanding voting stocks or shares of both seller and buyer.
They are shareholders in the same company controlling less than five percent of voting stocks.
Which of the following is not an acceptable basis under Method Six?
The selling price in the Philippines of locally produced goods
The transaction value of the imported goods
The computed value determined under Method Five
The transaction value of identical goods
When multiple sales and agreements to sell occur before goods are exported to the Philippines, the sale for exportation is considered the __________ to the Philippines.
original sale
second sale
sale
A company sells specialized equipment to a related party, and the price is deemed adequate to cover costs and provide reasonable profit margins. What conclusion can be drawn about the transaction value?
The transaction value is automatically acceptable due to profitability.
The relationship must be investigated to ascertain any price influence.
The transaction value can be accepted if no influence is demonstrated, regardless of profitability.
The transaction value must be rejected due to the related-party status.
A foreign supplier sells machinery to a related buyer in the Philippines. The transaction value closely approximates the computed value of similar machinery sold to unrelated buyers. What does this imply about the acceptability of the transaction value?
The transaction value is automatically acceptable due to the approximation.
The transaction value can be accepted if it can be shown that no influence exists from their relationship.
The transaction value is acceptable under the test value provision.
The transaction value must be rejected since the buyer and seller are related.
A retailer purchases electronics from a distributor. The distributor is partially owned (30%) by the retailer’s parent company. How should this ownership stake affect the evaluation of the transaction value?
The transaction value may be rejected because the parent company’s ownership constitutes a related-party relationship.
The transaction value is acceptable since the ownership does not exceed 50%.
The transaction value may be rejected if it can be shown that the ownership influences the pricing.
The transaction value is acceptable if the distributor provides an independent market analysis of the goods.
In applying Method Two and Three, if more than one transaction value of the goods is found, which value shall be used to determine the dutiable of imported goods?
Lowest of such value
Highest of such value
The value of the highest quantity
The value of the lowest quantity
A buyer purchases goods from a supplier. The supplier’s owner is a member of the buyer’s family, specifically the buyer’s brother-in-law. According to the criteria for being considered related, what should be concluded regarding the acceptability of the transaction value?
The transaction value is acceptable because the relationship is by affinity and does not influence the sale.
The transaction value may be rejected since the buyer and supplier are related by affinity.
The transaction value is acceptable as long as the buyer can prove that the price was not influenced by their relationship.
The transaction value may be rejected if the relationship affects the negotiation of the price.
A shipment of aircraft engine was the subject of sales agreement between the buyer and seller. The invoice price amounted to $18,000.00 less 3% cash discount granted by the seller for payment by the buyer at the earliest date. If the buyer was a wholesaler and was granted a trade discount of 10% as a wholesaler, how much is the price actually paid or payable?
(a)
AJ Enterprises in Cebu imported from BF Industries Inc. in Moscow leather clothes with total CIF value of $12,000.00. On a previousshipment of leather clothes from BF Industries Inc. to Cred Inc., a new customer in Cebu, an $800.00 in damage had occurred during the shipment. BF Industries Inc. asked AJ Enterprises to make an immediate settlement of the damage claim with Cred Inc. and AJ Enterprises would then deduct $800.00 from his invoice price amounting to $11,200.00. How much is the total dutiable value under Method One? Use rate of exchange P53.75/$1.00.
(a)
A shipment of 3 units of washing machine were sent by a manufacturer in China to the Philippines per instruction by the seller in Japan. The manufacturer’s price amounted to $3,000.00. Earlier, the seller enters into trade agreement with the buyer to sell the said washing machines worth $5,000.00 and thus, prompted the seller to order from a manufacturer in China. How much is the price actually paid or payable?
(a)
Customs proposes a system that always accepts the higher of two values (invoice or reference value). Is this valid under Method Six?
Yes, because it protects revenue
Yes, if approved by the Commissioner
No, it is expressly prohibited
No, unless exporter agrees
A buyer paid an amount of $8,000.00 to the seller for his importation of computer accessories. The seller would have charged the buyer of$10,000.00 but the buyer settles the seller’s debt owed to him during a previous transaction amounting to $2,000.00. How much is the priceactually paid or payable?
(a)
Silver Milk Inc. in Australia enters into agreement with Ava Corporation in the Philippines for the supply of dairy products. The prices are freely negotiated between Silver Milk Inc. and Ava Corporation. According to sales contact, Ava Corporation must pay 5% of the invoice price as proceeds for subsequent resale. The covering invoice shows total FOB value of $22,000.00 with percentage of proceeds indicated. The bill of lading indicated freight charges of $1,750.00. Determine the total dutiable value under Method One. Use rate of exchange P41.20/$1.00.
(a)
Which of the following customs valuation methods allows the addition of assists undertaken in the Philippines?
Method 1 — Transaction Value
Method 3 — Transaction Value of Similar Goods
Method 5 — Computed Value
Method 6 — Fallback Method
Under Method 6, the customs value is determined by:
The price paid or payable for the goods, adjusted by specific conditions.
The computed value, based on the production costs.
A flexible approach based on reasonable means and available information when the above methods cannot be applied.
The transaction value of identical goods or similar goods.
Which of the following is true about the use of Method 6?
It is used as a last resort when no other methods can be applied.
It always requires the use of identical goods for valuation.
It is the preferred method for valuing all goods.
It requires a breakdown of production costs.
Which of the following is a primary component of the computed value under Method 5?
The price paid for the goods plus transportation costs.
The cost of manufacturing or production, including materials, labor, and overhead.
The sale price of identical goods in the importing country.
The transaction value of similar goods in the exporting country.
A shipment of 100 bagged cargoes STC: clothing apparel arrived at NAIA under a letter of credit. The shipment was assessed with total dutiable value of ₱589,100.50. The rate of duty was 10% and the rate of exchange was ₱46.10/$1.00. Compute the total landed cost.
(a)
Customs tries to use the export price of the goods to Malaysia as the basis for goods bound for the Philippines. Is this correct?
Yes, export prices to any country can be used.
Yes, if they are similar markets.
No, export prices to other countries are not allowed.
No, unless approved by the Tariff Commission.
A shipment declared under formal entry has a dutiable value of ₱750,000.01. How much is Import Processing Fee?
(a)
Under Method Four, what is the primary basis for determining the customs value of imported goods?
The invoice price of the imported goods
The computed value based on production cost
The unit price at which the imported goods or identical/similar goods are sold in the Philippines
The price agreed upon between buyer and seller abroad
An importer buys goods for USD 75,000. The sale includes a condition that the buyer must also purchase advertising services from the seller worth USD 10,000. Additionally, the seller retains control over how the goods will be resold in the Philippines. There is no relationship between the buyer and seller. Can the transaction value method be used to determine the dutiable value?
Yes, because the buyer and seller are not related.
No, because the resale condition affects the price of the goods.
Yes, because advertising is not relevant to the goods.
No, because advertising services must be included in the dutiable value.
Which section of the CMTA governs the sequential valuation of imported goods?
Section 700
Section 701
Section 703
Section 704
A shipment with a total dutiable value of ₱150,000.00 was entered for warehousing. The goods were withdrawn in a complete withdrawal. Compute the total brokerage fee paid to BOC.
(a)
Which of the following issuances provides the rules and regulations on the application of the Transaction Value System for customs valuation in the Philippines?
CAO 1-2019
CAO 2-2019
CMO 16–2010
CMO 1-2019
A clothing manufacturer in Vietnam ships garments to a Philippine retailer to be sold, but ownership remains with the exporter until the goods are sold. This is classified as:
Goods imported on consignment
Goods imported under a hire or leasing contract
Goods supplied on loan
Goods imported by intermediaries
A local airline leases aircraft parts from a U.S. supplier for a fixed monthly rental. The goods are returned after the lease period. This situation is an example of:
Goods imported on consignment
Goods supplied on loan
Goods imported by intermediaries
Goods imported under a hire or leasing contract
A seller requires a buyer of automobiles not to sell or exhibit them before a fixed date, which marks the beginning of a new model year. This restriction is:
Acceptable since it limits ownership rights
Acceptable since it does not substantially affect the value of the goods
Not acceptable since it affects the transaction value
Acceptable only if agreed in writing
The Bureau of Customs prohibits the importation of medicines without FDA approval. This restriction is:
Acceptable since it is imposed by law
Not acceptable because it limits sales
Acceptable only if temporary
Unacceptable unless waived by the seller
A seller requires the importer to pay additional charges every time the goods are resold locally, regardless of the resale price. This restriction is:
Acceptable as a standard commercial practice
Not acceptable since it affects the transaction value of the goods
Acceptable if agreed upon in a separate contract
Acceptable only if it applies during promotions
A seller requires the buyer to resell the imported goods at a fixed price set by the seller. For customs valuation, this restriction is:
Acceptable since it is part of commercial practice
Not acceptable because it directly affects the value of the goods
Acceptable only if the buyer agrees in writing
Acceptable if approved by the Bureau of Customs
A Philippine importer and a foreign supplier are discovered to be officers in each other’s companies. For customs valuation purposes, this situation shows that:
There is no relationship between buyer and seller
They are legally recognized partners
They are considered related parties
They are employer and employee
A foreign supplier is the direct employer of the Philippine buyer who imports goods from him. This makes the buyer and seller:
Related parties under customs valuation
Independent business entities
Partners in business
Owners of voting shares in each other’s companies
A person owns 7% of the voting shares in both the exporting and importing companies. According to customs rules, this indicates:
A related-party relationship, since ownership exceeds 5%
No relationship, since it is below majority ownership
An employer–employee relationship
A partnership under business law
A foreign supplier owns the Philippine importer and makes all the major decisions in its operations. This means:
One directly or indirectly controls the other, making them related parties
They are independent companies without relationship
They are only contractual business partners
Their control relationship is irrelevant to customs valuation
A Philippine importer and a Japanese exporter are both owned by the same parent corporation. This situation shows:
They are unrelated since they operate in different countries
They are related parties because both are controlled by a third person
They are independent companies since they pay taxes separately
They are only trading partners, not related parties
A customs audit shows that the importer and the foreign seller are first cousins. For customs valuation, this is:
Not a relationship since it is personal, not business
A related-party relationship since they are related by consanguinity within the fourth civil degree
Acceptable only if they declare it to Customs
A partnership under family business law
A foreign exporter is the great-grandfather of the Philippine importer. Are they related?
Yes, related within the 4th civil degree of consanguinity
No, not related because of the generation gap
Related only if both share business ownership
Not related unless proven by documents
A local importer buys goods from his stepdaughter’s husband abroad. Are they related?
Yes, related by affinity
No, not related because it is not by blood
Related only if recognized in family law
Not related since in-laws are excluded
A foreign exporter is the nephew of the Philippine importer. Are they related?
Yes, related
No, not related
Related only if the nephew depends financially on the importer
Related only through a formal partnership
The importer in Manila buys goods from his best friend abroad, but they are not blood relatives. Are they related parties?
Yes, related because of close ties
No, not related since friendship is not recognized under customs rules
Related only if the friendship is documented
Related if they own shares in each other’s companies
A foreign supplier is the sister-in-law of the local importer. Are they related?
Yes, related by affinity
No, not related
Related only if they have joint investments
Related if the importer’s spouse agrees
Transaction value is often expressed using INCOTERMS 2020, but not under which group of terms?
“E” terms
“F” terms
“C” terms
“D” terms
It refers to the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods.
Customs duty
Transaction value
Freight charges
Insurance premium
Under the customs valuation system, the importer may request the reversal of the order of application of which methods?
Methods Two and Three
Methods Four and Five
Methods Five and Six
Methods One and Four
If the Commissioner of Customs determines that reversing Methods Four and Five will create difficulties in determining the dutiable value under Method Five, then:
The request shall still be granted
The importer must choose another method
The request shall be denied and Method Four shall be applied
The importer must appeal to the Tariff Commission
If the importer does not request for the reversal of Methods Four and Five, what sequence shall be followed?
Method Five before Method Four
The normal order of application
Commissioner’s discretion order
Transaction value system only
An importer in Manila requests that Method Five be applied before Method Four. The Commissioner agrees, and the valuation proceeds without difficulty. Which principle is being applied?
Flexibility in applying Methods Two and Three
Permissible reversal of Methods Four and Five
Automatic use of Method Six
Substitution of Method One
Canon Corporation imported 200 sacks of rice from Australia. The shipment arrived at Port of Manila with each sack weighing 170 pounds. Compute the total wharfage.
(a)
An importation of 5 x 40 FCL: STC General Merchandise arrived at Port of Manila. If the discharged was pier side, calculate the amount of wharfage due with VAT.
(a)
An importation of 5 x 40 FCL: STC General Merchandise arrived at Port of Manila. If the discharged was pier side, calculate the amount of wharfage due for purposes of filing the SAD.
(a)
A shipment of dangerous cargo arrived at Port of Cebu with total CFR value of $25,000.00. The commercial invoice shows freight charges of $1,750.00 while the BL shows freight charges of $1,900.00. The ROE at the time of filing was P43.75/$1.00 while the ROD was 10%. Compute the dutiable value.
(a)
A general cargo was loaded at Port of Cebu last October 20, 2025. The said shipment has a CIF value of $19,500.00. How much is the brokerage fee, inclusive of VAT? ROE P55.60/$1.00.
(a)
