Find Related Questions by Tags, levels, etc.
Zezee Nigeria Limited was incorporated on September 7, 2012, but it did not commence business until July 1, 2013. Based on the Memorandum and Articles of Association, the company was incorporated to carry on the business of distributorship and general contracting.
Extracts of the Company’s Statements of Profit or Loss and Other Comprehensive Income are as given below:
| Period | 6 Months Ended Dec 31, 2013 | Year Ended Dec 31, 2014 | Year Ended Dec 31, 2015 |
|---|---|---|---|
| Revenue | 5,430,000 | 12,600,000 | 18,400,000 |
| Direct Cost | (890,000) | (1,345,000) | (1,910,000) |
| Gross Profit | 4,540,000 | 11,255,000 | 16,490,000 |
| Other Income | 45,000 | 458,150 | 201,000 |
| Distribution Cost | (386,000) | (820,000) | (1,060,500) |
| Administrative Expenses | (4,810,550) | (6,510,440) | (8,240,600) |
| Other Expenses | (41,000) | (113,240) | (145,100) |
| Net (Loss)/Profit | (652,550) | 4,269,470 | 7,244,800 |
Additional Information:
| Details | 6 Months Ended Dec 31, 2013 | Year Ended Dec 31, 2014 | Year Ended Dec 31, 2015 |
|---|---|---|---|
| Sale of Scraps | – | 57,000 | – |
| Interest Received on Treasury Bills | – | 325,000 | 120,000 |
| Interest on Domiciliary Account | 45,000 | 76,150 | 81,000 |
| Total Other Income | 45,000 | 458,150 | 201,000 |
| Details | 6 Months Ended Dec 31, 2013 | Year Ended Dec 31, 2014 | Year Ended Dec 31, 2015 |
|---|---|---|---|
| Depreciation | 160,000 | 320,000 | 440,000 |
| Preliminary and Formation Expenses | 216,000 | – | – |
| Penalties and Fines | – | – | 65,000 |
| General Provision for Bad Debts | 110,000 | 180,000 | 240,000 |
| Staff Salaries | 2,060,000 | 4,230,000 | 4,230,000 |
| Office Rent | 600,000 | 1,200,000 | 1,800,000 |
| Asset | Date of Purchase | Cost (N) |
|---|---|---|
| Furniture and Fittings | June 7, 2013 | 980,000 |
| Motor Vehicles | June 30, 2013 | 2,400,000 |
| Office Equipment | July 1, 2013 | 1,200,000 |
| Period | 6 Months Ended Dec 31, 2013 | Year Ended Dec 31, 2014 | Year Ended Dec 31, 2015 |
|---|---|---|---|
| Net Assets | 1,360,000 | 2,870,500 | 3,260,700 |
| Paid-up Share Capital | 5,000,000 | 5,000,000 | 5,000,000 |
Required:
For all the relevant years of assessment, you are required to:
a. Compute the Adjusted Profit/Loss. (9 Marks)
b. Determine the Assessable Profit/Loss and advise the Company on whether or not to exercise its right of election. (6 Marks)
c. Compute the capital allowances. (4½ Marks)
d. Compute the tax liabilities. (10½ Marks)
(Total 30 Marks)
Find Related Questions by Tags, levels, etc.
For the assessment year 2018, below are the extracts from the tax computations of Alaba Trading Limited:
| Item | Amount (₦) |
|---|---|
| Assessable profit | 8,200,000 |
| Capital allowances | 5,400,000 |
| Dividend payable | 6,000,000 |
Required:
Determine the total tax liabilities of Alaba Trading Limited for the assessment year.
Find Related Questions by Tags, levels, etc.
Dadinkowa Nigeria Limited has been in business since 2009 as a manufacturer of sugar cubes. The company sources its raw materials, sugar cane, from the Northern part of the country. However, due to local security challenges, the company has faced supply disruptions since 2016.
Additionally, the company has disagreements with tax authorities regarding the treatment of certain items (e.g., donations and dividend income) in their financial statements and returns. High overhead costs, especially energy expenses, have worsened operational challenges.
At a recent board meeting, the directors proposed either a temporary closure or relocating to a neighboring country if conditions do not improve in the next fiscal year. The General Manager shared this with you during your visit as the company’s tax consultant, seeking your advice to address these issues.
A scheduled meeting with the Managing Director requires you to prepare a comprehensive tax report addressing:
The profit or loss account for the year ended December 31, 2021, is as follows:
Profit or Loss Account:
Extract from the company’s statement of financial position as at December 31, 2021 revealed:
The following additional information was made available:
(v) Interest on loan was paid on a facility obtained from a licensed Nigerian deposit money bank at commercial interest rate.
(vi) General and administrative expenses were made up of:
(vii) Donations and subscriptions
Included in donations was N12,000,000 paid to a fund created by the Federal Government for victims of communal crisis that took place where the company is situated.
(viii) The tax written down values of the qualifying capital expenditure (QCE) items as at December 31, 2020 were:
(ix) Additions to QCEs during the year ended December 31, 2021 were:
(x) Unrelieved capital allowances brought forward were N15,200,000.
(xi) Unabsorbed losses from previous years were:
Required:
As the company’s Tax Consultant, you are to draft a report to the Managing Director for the scheduled meeting expected to hold next week. This is expected to address the following:
a. Determination of the company’s tax liabilities for the relevant tax year. (20 Marks)
b. Comment, in line with the provisions of Companies Income Tax Act Cap C21 LFN 2004 (as amended) on:
i. The treatment of donations made by the company during the year under review (5 Marks)
ii. Exemption of dividends from taxation (5 Marks)
Find Related Questions by Tags, levels, etc.
Bivenette Petroleum Company Limited has been in the oil prospecting business for some years. Extracts from its financial statements for the year ended December 31, 2013 show the following information:
Additional Information:
You are required to:
Find Related Questions by Tags, levels, etc.
Debby Oil Limited is an oil prospecting company that has been operating in the deep ocean of the Niger Delta since 1990. The company makes up its accounts to December 31 each year.
The company is in discussion with a consortium of five deposit money banks in Nigeria for the purposes of taking a medium-term (5 years) loan facility of USD 5 million to finance further expansion of its facilities and acquisition of a marginal field. As part of the documents required by the banks for processing the loan facility are the audited financial statements and tax computations for the last five financial years. The company is yet to submit the documents for the year ended December 31, 2020, to the consortium.
The extract from its activities for the year ended December 31, 2020, is as presented below:
| Item | Amount (₦’000) |
|---|---|
| Oil inventory (Jan 1, 2020) | 1,220,000 |
| Oil inventory (Dec 31, 2020) | 1,380,000 |
| Sales – Export | 9,524,000 |
| Sales – Local | 2,900,500 |
| Other income | 1,235,300 |
| Production cost | 3,440,000 |
| Operating expenses | 1,789,600 |
| Intangible drilling cost | 1,425,200 |
| Tangible drilling cost | 532,000 |
| Traveling expenses | 54,000 |
| Salaries and wages | 1,860,000 |
| Pension fund contribution | 175,000 |
| Loan interest | 150,000 |
| General expenses | 800,500 |
| Depreciation | 170,000 |
| Royalties and production rentals | 810,000 |
| Donation | 20,000 |
| Bank charges | 25,300 |
| Harbour dues | 15,000 |
| Non-productive rent | 350,000 |
| Audit and accountancy fees | 28,000 |
| Customs duty on essentials | 7,300 |
| Income tax provision | 865,860 |
| Transfer to general reserves | 900,000 |
Additional Information:
Required:
As the company’s Assistant Tax Manager, draft a report to the Tax Manager showing the company’s tax liability for the relevant assessment year according to the Petroleum Profits Tax Act, Cap P.13, Laws of the Federation of Nigeria 2004 (as amended).
Find Related Questions by Tags, levels, etc.
Sunny Oil Producing Nigeria Limited is engaged in petroleum exploration in the deep sea off the coast of Bight of Benin in the Niger delta region since 2005. It is involved in a production sharing contract with the Nigerian National Petroleum Corporation. In order to consolidate its position in the Nigerian oil and gas sector, the company intends to diversify its operations into the ocean-going oil tanker transportation business in the next few months.
The company submitted its annual returns and statement of tax computation in respect of the year ended December 31, 2018, to the Federal Inland Revenue Service office in April 2019, but there was a disagreement between the amount raised by the tax office and that of the company. A check by the financial accountant of the company revealed that capital allowances on plant and equipment acquired for N120.5 million during the year, as well as a donation of N50 million made to an institution of higher learning, were not taken into consideration in the determination of assessable profit. A letter explaining this discrepancy was written by the Managing Director to the FIRS, but instead of the issue being resolved, a notice, giving the company date and time for hearing before the Tax Appeal Tribunal was received.
In order for the company to be properly guided in the pursuit of the case before the tribunal, it was resolved that a competent firm of Chartered Accountants with a bias in oil and gas accounting and taxation should be engaged.
Your firm has been appointed as the company‘s tax consultants with the mandate of representing the company at the sittings of the Tax Appeal Tribunal. Relevant documents in respect of the acquisition of the plant and equipment and donation were made available to you.
The extract from the books of accounts of the company for the year ended December 31, 2018 revealed the following:
(i) Export sales:
Price per barrel at 36° API:
(ii) Actual realised price is arrived at after adjusting for the variance in API. For every API, $0.03 is the variance in price at 36°.
(iii) Domestic sales: 80,000 barrels at N720 per barrel.
(iv) Expenses incurred include:
| Description | Amount (N’000) |
|---|---|
| Operating expenses | 255,000 |
| Production and exploration | 1,100,600 |
| Intangible drilling cost | 420,800 |
| Administrative expenses | 225,500 |
| Non-productive rent | 80,700 |
| Bad debts written off | 20,150 |
| Repairs and renewals | 92,600 |
| Transportation and traveling | 73,200 |
| Royalties | 222,900 |
| Miscellaneous expenses | 63,800 |
| Salaries and wages | 830,700 |
| Pension fund contribution | 74,450 |
| Customs duty (non-essentials) | 10,400 |
| Harbour dues | 3,300 |
| Stamp duties on debenture | 2,500 |
| Interest on loan | 52,350 |
| Cost of 3 appraisal wells | 120,000 |
| Income tax provision | 750,000 |
| Transfer to special reserves | 255,000 |
Additional Information:
(i) Production and exploration include N80 million incurred on tangible drilling operation and depreciation of N200.2 million.
(ii) Royalties include an amount of N22.5 million in respect of royalties on domestic sales.
(iii) Miscellaneous expenses include, among others, N12.75 million spent on obtaining information on the existence of oil in the Middle-Belt and N50 million donation to a public university in one of the states in the Niger delta region.
(iv) The Joint Tax Board gave approval for the operation of the pension fund contribution in the company.
(v) Interest on the loan includes N12.3 million paid to a subsidiary company. The transaction was made at the prevailing market rate.
(vi) The company entered into a gas contract with the following:
| Company | Load factor | Amount (N’000) |
|---|---|---|
| Akin Gas Limited | 66 | 220,000 |
| Bollah Limited | 71 | 350,000 |
(vii) Schedule of qualifying capital expenditure:
(viii) Unutilised capital allowance and loss brought forward from the previous year were N12.5 million and N750 million, respectively.
(ix) Capital allowance as agreed with the relevant tax authority was N130.25 million.
(x) The amount stated in respect of transfer to special reserves was approved by the company’s Board of Directors to be utilised for future investment opportunities.
(xi) Assume N305 is equivalent to US $1.
(xii) Profits from petroleum exported or sold domestically are taxable at 85%.
Required:
a. As the company‘s tax consultant, you are to draft a report to the Managing Director explaining the following:
i. The preparation which you and the company should make before the commencement of the proceedings at the tribunal. (2 Marks)
ii. Steps to be taken by the company if the decision of the tribunal is not acceptable to it. (2 Marks)
iii. The tax implication of the company‘s proposed transportation business. (1 Mark)
b. Re-computing the following:
i. Assessable profit (8 Marks)
ii. Chargeable profit (3 Marks)
iii. Assessable tax (1 Mark)
iv. Chargeable tax (1 Mark)
v. Total tax payable (2 Marks)
Find Related Questions by Tags, levels, etc.
Ayokunle Oil Nigeria Limited engages in petroleum operations. The company was incorporated in 2005 but commenced business in January 2010. It operates in the continental shelf at a water depth of 155 metres. The company makes up its accounts to December 31 each year.
The company has presented the following statement of activities for the year ended December 31, 2016:
Expenses incurred:
| Expense Type | Amount (₦) |
|---|---|
| Operating costs | 523,750 |
| Non-productive rent | 110,420 |
| Intangible drilling cost | 439,000 |
| Custom duty | 53,200 |
| Salaries and other personnel costs | 280,500 |
| Interest paid | 50,410 |
| Royalty on oil exported | 110,600 |
| Royalty on local sales | 41,200 |
| Stamp duty | 1,050 |
| Donations | 22,000 |
| Transportation | 72,070 |
| Administration and general expenses | 340,200 |
| Bad debts | 66,000 |
| Pension contribution | 21,000 |
| Miscellaneous expenses | 32,170 |
Additional Information:
Required:
Determine for the relevant assessment year the following:
a. Assessable Profit (7 Marks)
b. Chargeable Profit (3 Marks)
c. Chargeable Tax (1 Mark)
(Total 15 Marks)
Find Related Questions by Tags, levels, etc.
Ibrahim Oil Nigeria Limited is an oil prospecting company which commenced production in commercial quantity in 2008. Its accounting year end is December 31. The company has provided the following Statement of Profit or Loss for the year ended December 31, 2016:
| Description | Amount (N’000) |
|---|---|
| Revenue (value of oil produced) | 2,455,200 |
| Operating costs | (952,500) |
| Non-productive rent | (63,200) |
| Royalty on export sales | (14,775) |
| Depreciation of Property Plant and Equipment | (65,400) |
| Tangible drilling cost | (53,800) |
| Donation | (2,500) |
| Stamp duties | (1,250) |
| Repairs and renewal of machinery | (2,000) |
| Exploration and drilling costs | (100,300) |
| Custom duties on Plant and Machinery | (1,130) |
| Bad and doubtful debts | (26,500) |
| Pension and provident funds | (30,600) |
| Interest paid | (26,200) |
| General expenses | (11,050) |
| Income tax provision | (120,000) |
| Net Profit | 983,995 |
Additional Information:
Required: Determine for the relevant assessment year, the following:
Find Related Questions by Tags, levels, etc.
Tamilore Limited (TL) is an agro-based firm, specializing in yam and rice production in Benue State of Nigeria. One of the harvesters is due to be replaced on November 30, 2018, the last day of TL’s current financial year. An investment appraisal exercise has recently been completed which confirmed that it is financially beneficial to replace the machine at this point. TL is now considering how best to finance the acquisition of the harvester to be replaced. TL is already highly geared.
A government development agency has offered the following two alternative methods of financing the machine:
Alternative 1
A loan of N49,200,000 at 6% interest rate to buy the machine on November 30, 2018. If this option is selected, the machine will be depreciated on a straight-line basis over its estimated useful life of 5 years.
Alternative 2
Enter into a finance lease. This will involve payment of annual rental of N12 million with the first payment due on November 30, 2019. The lease payments will be for the entire estimated useful life of the machine, which is 5 years, after which ownership will pass to TL without further payment.
Other information
(i) Whether leased or purchased outright, maintenance would remain the responsibility of TL and would be N450,000 payable annually in advance.
(ii) TL is liable to tax at a rate of 25%, payable annually at the end of the year in which the tax charge or tax saving arises.
(iii) TL is able to claim capital allowances on the full capital cost of the machine in equal installments over the first four years of the machine.
(iv) Assume that TL has sufficient taxable profits to benefit from any savings arising therefrom.
(v) All workings in N’000.
Required:
a. Show that the implied interest rate in the lease agreement is 7%. (3 Marks)
b. Advise, using present value method, whether Tamilore Limited should borrow to buy the machine or lease it. (12 Marks)
c. Instead of lease financing, one director has suggested an equivalent Islamic finance.
i. Explain briefly the principles of Islamic finance. (2 Marks)
ii. Explain three main advantages of Islamic finance. (3 Marks)
Find Related Questions by Tags, levels, etc.
Quickfix Limited deals in the sale of Sweetmilk brand of drink. The company commenced business on 1 May 2000. Due to the prohibitive cost of doing business in Nigeria, it decided to cease business on 1 July 2012. The following information was extracted from its records:
| Year of Assessment | Assessable Profit/(Loss) | Capital Allowance | Total Profit | Tax Paid |
|---|---|---|---|---|
| 2007 | (1,921,400) | 4,681,450 | – | – |
| 2008 | 3,942,000 | 5,817,000 | 1,314,000 | 394,200 |
| 2009 | 9,201,750 | 4,168,500 | 3,067,250 | 920,175 |
| 2010 | 7,581,750 | 6,633,000 | 2,527,250 | 758,175 |
| 2011 | 11,580,750 | 9,058,000 | 3,860,250 | 1,158,075 |
| 2012 | 4,664,375 | 4,190,500 | 1,554,790 | 466,438 |
The company made a claim for unutilized capital allowances to be carried back. During the period, 1 January to 30 June 2013, the adjusted loss of the company was N1,614,500. Capital Allowance due was N2,561,250.
The tax computations as agreed are as follows:
Required:
a. Compute the revised assessment of Quickfix Limited on cessation basis, taking into account unutilized capital allowances.
b. Determine the tax refundable by the Federal Inland Revenue Service (FIRS) for the relevant years of assessment.
Find Related Questions by Tags, levels, etc.
You attended an interview for employment as Assistant Manager (Tax) in a professional firm. The following were presented to you to proffer solutions:
Mariam, Ola, Jude and Co., a firm of quantity surveyors, makes up its accounts to December 31 of each year. The following details were extracted from the firm’s accounting books in respect of the year ended December 31, 2019:
| Item | Amount (N) |
|---|---|
| Net profit for the year | 1,540,000 |
| Legal expenses for successfully defending one of the partners for alleged professional misconduct | 100,000 |
| Depreciation | 360,000 |
| Profit on sale of property, plant and equipment | 4,220 |
| Balancing charge | 10,400 |
| Balancing allowance | 6,900 |
| Capital allowances for the year | 300,000 |
Additional information:
Required:
Compute the personal income tax assessable for each partner for the relevant year of assessment.
Find Related Questions by Tags, levels, etc.
Mr. Adeola has been in the employment of Hope Nigeria Limited for a long time, rising to Senior Manager, while also running a trading business. He ceased trading on December 31, 2014, to focus on his employment fully. The following information pertains to his income:
Trading: (i) Trading results for the periods:
Year ended August 31, 2012: N2,400,000
Year ended August 31, 2013: N1,800,000
Year ended August 31, 2014: N2,625,000
Period ended December 31, 2014: N360,000
(ii) Capital Allowances for the Years of Assessment:
2012 Assessment Year: N240,000
2013 Assessment Year: N180,000
2014 Assessment Year: N120,000
(iii) On January 1, 2015, N360,000 was received from a debtor whose debt had been written off.
Employment:
(i) Annual salary: N3,600,000.
(ii) Transfer cost spent by the company: N52,000.
(iii) A motor car provided for his exclusive use, costing N7,200,000.
(iv) Domestic staff with a salary of N600,000 per annum provided by the company.
(v) He receives assignable luncheon vouchers worth N360,000 annually.
Other Information:
(i) He derives a gross rent of N1,200,000 annually, with 10% withholding tax deducted.
(ii) Receives annual interest of N80,000 on fixed deposits.
(iii) Pays N240,000 annually as life assurance premium.
(iv) Contributes N180,000 to the National Housing Fund and N150,000 to the National Health Insurance Scheme.
(v) Pays N596,250 annually for Pension Fund Contribution.
Required:
Compute the tax payable by Mr. Adeola in respect of 2014 Year of Assessment. (Ignore the penultimate year)
Find Related Questions by Tags, levels, etc.
b. Dan Ruwa Nigeria Limited is a company that specializes in the production of bottled and sachet water. The company was incorporated on January 1, 2018.
The summarised financial statements of the company for the year ended December 31, 2018, are as follows:
Extract of Statement of Profit or Loss for the year ended December 31, 2018:
| Description | N’000 |
|---|---|
| Revenue | 270,000 |
| Administrative and other allowable expenses | (138,000) |
| Accounting depreciation | (11,000) |
| Net profit before taxation | 121,000 |
Extract of Statement of Financial Position as at December 31, 2018:
| Description | N’000 |
|---|---|
| Property, plant & equipment | 48,000 |
| Motor vehicle | 12,000 |
| Less: Depreciation | (11,000) |
| Carrying amount | 49,000 |
| Description | N’000 |
|---|---|
| Ordinary share capital | 17,000 |
| Retained earnings | 12,000 |
| Other liabilities | 20,000 |
| Total | 49,000 |
The Federal Inland Revenue Service (FIRS) granted the company a capital allowance on its non-current assets, which amounted to N15,000,000, and the company income tax rate is 30%.
Required:
i. Calculate the current income tax expense and the deferred tax liability balance that should be disclosed in the statement of financial position of the company as at December 31, 2018.
(10 Marks)
ii. Prepare the statement of profit or loss of Dan Ruwa Nigeria Limited showing the tax expense for the year ended December 31, 2018.
(5 Marks)
Find Related Questions by Tags, levels, etc.
Ajani-Ogun Ventures Limited was incorporated on February 1, 2012, and commenced business on September 1, 2013. The company makes up accounts to August 31, every year. The following additional information is provided:
The Finance Director was worried that the tax officials would soon conduct a tax
audit of their financial transactions and he wanted to know the tax liabilities
payable to the Federal Inland Revenue Service for the relevant assessment years.
During the year ended August 31, 2020, the company achieved a revenue of
N20,000,000.
Required:
a. Compute the income tax for 2018 to 2021 years of assessment, taking into consideration the provisions of the Finance Act, 2019. Ignore minimum tax computation. (15 Marks)
Find Related Questions by Tags, levels, etc.
Chief Adio Jaiyesimi, a Chartered Accountant, died in London after a brief illness on June 10, 2015. He was survived by four children namely: Akeem; Ayodeji; Olabisi; and Adekunle. He created a trust for the benefits of his four children. The records of the trustee for the year ended December 31, 2020, have revealed the following:
| Description | Amount (N) |
|---|---|
| Adjusted trading profits for the year ended December 31, 2020 | 36,400,000 |
| Dividend (gross) | 305,000 |
| Rental income (gross) | 820,000 |
| Interest received (gross) | 118,500 |
| Sundry income | 24,800 |
Additional information:
(i) Fixed annuity paid to Deji, his first child: 81,000
(ii) Fixed remuneration for the trustee: 500,000
(iii) Variable remuneration of the trustee – 5% of gross income: 56
(iv) Allowable expenses of the trustee as agreed: 60,000
(v) Capital allowances as agreed with the Revenue: 395,000
(vi) Discretionary payments were made by the trustee in agreement with the trust deed as follows:
| Beneficiary | Amount (N) |
|---|---|
| Akeem | 300,000 |
| Ayodeji | 250,000 |
| Olabisi | 220,000 |
| Adekunle | 180,000 |
(vii) One third of the distributable income is to be shared equally among the children.
Required:
a. Compute the net distributable income in the hands of the trustee. (13 Marks)
b. Compute the assessable income in the hands of each beneficiary. (7 Marks)
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Tosin Oguntona was an employee of a Federal Government parastatal in Nigeria. While in service, he invested his earnings in various investments, deriving incomes from them along with his monthly pension. The following details were provided:
| Assessment Years | 2013 | 2014 |
|---|---|---|
| Dividend Income | ||
| Dividend from Nigerian companies | N1,200,000 | N1,500,000 |
| Dividend from abroad paid into a domiciliary account | $4,000 | $4,500 |
| Rental Income | ||
| Rent from buildings in Ibadan | N630,000 | N720,000 |
| Rent from buildings in Abuja | N1,500,000 | N1,740,000 |
| Rent from buildings in Oyo | N420,000 | N520,000 |
| Rent from buildings in Lagos | N750,000 | N780,000 |
| Expenses | ||
| Repairs and maintenance | N90,000 | N96,000 |
| Personal income tax paid | N240,000 | N280,000 |
| Water rate | N40,000 | N50,000 |
| Depreciation on building | N620,000 | N700,000 |
| Agent’s commission | N96,000 | N108,000 |
| Insurance | N120,000 | N150,000 |
| Depreciation on plant | N150,000 | N162,000 |
| Interest Incomes | ||
| Interest received from bank | N360,000 | N420,000 |
| Interest on domiciliary account | $1,200 | $1,500 |
Other information:
Required:
Compute the Assessable Incomes of Tosin Oguntona for 2013 and 2014 Assessment Years.
Find Related Questions by Tags, levels, etc.
Mr. Bulamoyoh who lived in the Eastern part of Nigeria died testate in January 2015. He had three children: Moses, Peter, and Nana, but left his business with the trustees. Moses, the eldest son, thought he should be fully in charge of his father’s entire business and told the trustees not to bother about the payment of tax. The trustees claimed that they had a statutory obligation to render yearly tax returns for the estate to the relevant tax authority.
You are provided with the following information:
(i) Net profit of the business as adjusted for tax purposes for the year ended June 30, 2018 was N10,270,000.
(ii) Qualifying property, plant, and equipment acquired during the year ended June 30, 2018 were:
Required:
(a) Explain the following terminologies:
(i) Trust (1 Mark)
(ii) Beneficiary (1 Mark)
(iii) Life tenant (1 Mark)
(b) Compute capital allowances for the relevant year of assessment. (8 Marks)
(c) Compute the income tax payable by the trustees on the income for the relevant year of assessment. (9 Marks)
(Total 20 Marks)
Find Related Questions by Tags, levels, etc.
Elevate your professional expertise across key business domains with our comprehensive training programs
Follow us on our social media and get daily updates.
This feature is only available in selected plans.
Click on the login button below to login if you’re already subscribed to a plan or click on the upgrade button below to upgrade your current plan.
If you’re not subscribed to a plan, click on the button below to choose a plan