Customs Duties – Knowsia

TAI – Aug 2020 – L1 – Q5 – Customs and Excise Duties Valuation

Explain calculation of "value for duty purposes" for imports, locally manufactured goods, and exports.

Question

A) In relation to customs and excise duties, explain how the “value for duty purposes” is calculated on the following:

i. Imports

ii. Locally manufactured goods and services

iii. Export

(B) As part of the revenue mobilization campaign of the Ghana Revenue Authority, your firm, Messrs. Skin Pain & Co. has been contracted to carry out tax audit on the 2018 published accounts of a member of a group companies engaged in the importation of used spare parts. One of the audit teams has just returned to the office and submitted their audit file on Tom and Jerry Company Limited to you for review. The team has made the following findings:

The total IDF value of imports was $5,330,844.56, Import Duty and VAT paid were GH¢7,475,654.23 and GH¢6,546,689.04 respectively.
Total amount transferred to Okamoto Trading Corporation of Japan; the main suppliers was $9,182,250.00. This transfer included $1,237,500 allegedly transferred from the Managing Director’s own resources. The company has a ninety-day credit facility with Okamoto Trading Corporation.
Statement of account for the year ended 31/12/18 from Okamoto Trading Corporation indicated opening and closing balances as $540,690.60 and $708,732.02 respectively.
The account audited which had been filed with Ghana Revenue Authority indicated purchases of GH¢509,552.03 is local purchases from other importers.
Amount of Import Duty and VAT charged in the published accounts amounted to GH¢710,068.11 and GH¢461,544.51 respectively.
Note that import duty rate is 20%; VAT rate is 17½%; and $1.00=GH¢4.20.

You are required to:
i. Analyze the findings of the Audit Team and present a report to your Audit Manager indicating any tax implications of their findings.
ii. What further audit work would you advise the audit team to undertake on the transfer by the managing director to assure yourself that is not business income of funds belonging to the company or from a taxable source.

Answer

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Tags: Customs Duties, Excise Duties, Exports, Imports, Local Manufacturing, Tax Compliance, Valuation
Level: Level 1

Topic: Revenue Inquiry and Financial Analysis
Series: AUGUST 2020

CR – May 2017 – L3 – Q4 – Revenue Recognition (IFRS 15)

Advise on the correct accounting treatment for transactions involving contracts, licences, and purchase of components.

Question

Dango Plc is a conglomerate company operating in Nigeria with diverse interests across Africa. It prepares its financial statements in accordance with International Financial Reporting Standards with a year-end of September 30. The following transactions relate to Dango Plc.

(a) In February 2016, Dango Plc won a significant new contract to supply large quantities of rice to the government of Guyama, a small West African country, for the next two years. Under the terms of the arrangement, payment is made in cash on delivery once goods have been cleared by customs. The rice will be delivered in batches four (4) times every year, on April 1, July 1, October 1, and January 1. The batches for April 1, 2016, and July 1, 2016, amounting to N250 million and N380 million respectively, were delivered and paid. Dango incurred significant costs on customs duties for the first batch of delivery. The October 1 batch, valued at N520 million, was shipped prior to the year-end but delivered and paid for on October 1, 2016.

(b) On October 1, 2010, a 12-year licence was awarded to Dango Plc by the Federal Government to be the sole manufacturer of a chemical used in the Nigerian pharmaceutical industry. The licence was recognised on that date at its fair value of N196 million. The award of the licence motivated Dango Plc in 2011 to purchase a division of another Nigerian competitor company making similar products. Goodwill of N240 million was recognised on the purchase of the division. Dango Plc merged the activities of the newly acquired division with its own to create a specialist chemical sub-division, which it now classifies as a separate cash-generating unit. By 2016, the revenue of this cash-generating unit now amounts to 5% of the Group’s revenue.

(c) Dango Plc buys raw materials from overseas suppliers. It has recently taken delivery of 1,000 units of component X, used in the production of chemicals. The quoted price of component X was N1,200 per unit, but Dango Plc has negotiated a trade discount of 5% due to the size of the order. The supplier offers an early settlement discount of 2% for payment within 30 days, and Dango Plc intends to achieve this. Import duties of N60 per unit must be paid before the goods are released through customs. Once the goods are released, Dango Plc must pay a delivery cost of N5,000 to have the components taken to its warehouse.

Required:
Write a report to the directors advising them on the correct accounting treatment of the above transactions in the financial statements for the year ended September 30, 2016, in accordance with the provisions of the relevant standards.

Note: You may consider the relevance of the following standards to the transactions: IAS 20, IAS 2, IAS 38, IFRS 3, and IFRS 15.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Standards, Customs Duties, Discounts, Goodwill, Licenses, Revenue
Level: Level 3

Topic: Revenue Recognition (IFRS 15)

PSAF – Mar/Jul 2020 – L2 – Q6 – PSAF – Mar/July 2020 – L2 – Q6 – Methods of Privatisation and Customs Duties

Identify and explain methods of privatisation and the impact of customs and excise duties on economic behaviour.

Question

a. Privatisation may be defined as the transfer of asset, business, industry, or service from public to private ownership and control.
Required:
Identify and explain FOUR methods of privatisation. (10 Marks)

b. The customs and excise authority is one of the key border agencies in any country.
Required:
Explain the terms ‘excise’ and ‘customs duties’ and identify how each is used to influence economic behaviour. (10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Customs Duties, Economic Behaviour, Excise Duties, Privatisation
Level: Level 2

Topic: Customs and Excise Duties, Privatisation
Series: MAR/JULY 2020

TAI – Aug 2020 – L1 – Q5 – Customs and Excise Duties Valuation

Explain calculation of "value for duty purposes" for imports, locally manufactured goods, and exports.

Question

A) In relation to customs and excise duties, explain how the “value for duty purposes” is calculated on the following:

i. Imports

ii. Locally manufactured goods and services

iii. Export

The total IDF value of imports was $5,330,844.56, Import Duty and VAT paid were GH¢7,475,654.23 and GH¢6,546,689.04 respectively.
Total amount transferred to Okamoto Trading Corporation of Japan; the main suppliers was $9,182,250.00. This transfer included $1,237,500 allegedly transferred from the Managing Director’s own resources. The company has a ninety-day credit facility with Okamoto Trading Corporation.
Statement of account for the year ended 31/12/18 from Okamoto Trading Corporation indicated opening and closing balances as $540,690.60 and $708,732.02 respectively.
The account audited which had been filed with Ghana Revenue Authority indicated purchases of GH¢509,552.03 is local purchases from other importers.
Amount of Import Duty and VAT charged in the published accounts amounted to GH¢710,068.11 and GH¢461,544.51 respectively.
Note that import duty rate is 20%; VAT rate is 17½%; and $1.00=GH¢4.20.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Customs Duties, Excise Duties, Exports, Imports, Local Manufacturing, Tax Compliance, Valuation
Level: Level 1

Topic: Revenue Inquiry and Financial Analysis
Series: AUGUST 2020

CR – May 2017 – L3 – Q4 – Revenue Recognition (IFRS 15)

Advise on the correct accounting treatment for transactions involving contracts, licences, and purchase of components.

Question

Note: You may consider the relevance of the following standards to the transactions: IAS 20, IAS 2, IAS 38, IFRS 3, and IFRS 15.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Standards, Customs Duties, Discounts, Goodwill, Licenses, Revenue
Level: Level 3

Topic: Revenue Recognition (IFRS 15)

PSAF – Mar/Jul 2020 – L2 – Q6 – PSAF – Mar/July 2020 – L2 – Q6 – Methods of Privatisation and Customs Duties

Identify and explain methods of privatisation and the impact of customs and excise duties on economic behaviour.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Customs Duties, Economic Behaviour, Excise Duties, Privatisation
Level: Level 2

Topic: Customs and Excise Duties, Privatisation
Series: MAR/JULY 2020

Question Tag: Customs Duties

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TAI – Aug 2020 – L1 – Q5 – Customs and Excise Duties Valuation

Explain calculation of "value for duty purposes" for imports, locally manufactured goods, and exports.

CR – May 2017 – L3 – Q4 – Revenue Recognition (IFRS 15)

Advise on the correct accounting treatment for transactions involving contracts, licences, and purchase of components.

PSAF – Mar/Jul 2020 – L2 – Q6 – PSAF – Mar/July 2020 – L2 – Q6 – Methods of Privatisation and Customs Duties

Identify and explain methods of privatisation and the impact of customs and excise duties on economic behaviour.

TAI – Aug 2020 – L1 – Q5 – Customs and Excise Duties Valuation

Explain calculation of "value for duty purposes" for imports, locally manufactured goods, and exports.

CR – May 2017 – L3 – Q4 – Revenue Recognition (IFRS 15)

Advise on the correct accounting treatment for transactions involving contracts, licences, and purchase of components.

PSAF – Mar/Jul 2020 – L2 – Q6 – PSAF – Mar/July 2020 – L2 – Q6 – Methods of Privatisation and Customs Duties

Identify and explain methods of privatisation and the impact of customs and excise duties on economic behaviour.

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TAI – Aug 2020 – L1 – Q5 – Customs and Excise Duties Valuation

Explain calculation of "value for duty purposes" for imports, locally manufactured goods, and exports.

You're reporting an error for "TAI – Aug 2020 – L1 – Q5 – Customs and Excise Duties Valuation"

CR – May 2017 – L3 – Q4 – Revenue Recognition (IFRS 15)

Advise on the correct accounting treatment for transactions involving contracts, licences, and purchase of components.

You're reporting an error for "CR – May 2017 – L3 – Q4 – Revenue Recognition (IFRS 15)"

PSAF – Mar/Jul 2020 – L2 – Q6 – PSAF – Mar/July 2020 – L2 – Q6 – Methods of Privatisation and Customs Duties

Identify and explain methods of privatisation and the impact of customs and excise duties on economic behaviour.

You're reporting an error for "PSAF – Mar/Jul 2020 – L2 – Q6 – PSAF – Mar/July 2020 – L2 – Q6 – Methods of Privatisation and Customs Duties"

TAI – Aug 2020 – L1 – Q5 – Customs and Excise Duties Valuation

Explain calculation of "value for duty purposes" for imports, locally manufactured goods, and exports.

You're reporting an error for "TAI – Aug 2020 – L1 – Q5 – Customs and Excise Duties Valuation"

CR – May 2017 – L3 – Q4 – Revenue Recognition (IFRS 15)

Advise on the correct accounting treatment for transactions involving contracts, licences, and purchase of components.

You're reporting an error for "CR – May 2017 – L3 – Q4 – Revenue Recognition (IFRS 15)"

PSAF – Mar/Jul 2020 – L2 – Q6 – PSAF – Mar/July 2020 – L2 – Q6 – Methods of Privatisation and Customs Duties

Identify and explain methods of privatisation and the impact of customs and excise duties on economic behaviour.

You're reporting an error for "PSAF – Mar/Jul 2020 – L2 – Q6 – PSAF – Mar/July 2020 – L2 – Q6 – Methods of Privatisation and Customs Duties"

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