- 20 Marks
STP – Aug 2012 – L3 – Q1 – Tax Computation
Compute tax liability for Jamaa Mining Company for 2008 and 2009 based on provided financials.
Question
The profit and loss account of Jamaa Mining Company Ltd for the years ended December 2008 and 2009 are as tabled below:
| Year Ended 31 December (all amounts in ‘000) | ||
|---|---|---|
| 2009 GHC | 2008 GHC | |
| Turnover | 309,000 | 430,000 |
| Cost of Sales | (164,000) | |
| Gross Profit | 145,000 | |
| General and Admin Exp | (100,000) | |
| Operating Profit | 45,000 | |
| Other Income | 5,300 | |
| Net Profit before tax | 50,300 | |
| Income Tax provision | 12,575 | |
| Transfer to Income Surplus | 37,725 | |
| Income Surplus Account | ||
| Balance brought forward | 46,945 | |
| Transfer from profit and loss account | 9,220 | |
| Surplus carried forward | 46,945 |
Notes:
2. Turnover is made up as follows
For year
| 2009 | 2008 | |
|---|---|---|
| Collected for year but included in prior year a/c | 291,000 | |
| Interest income received for 18 months | 0 | 18,000 |
| 309,000 |
- Cost of sales includes:
| 2009 | 2008 | |
|---|---|---|
| Withholding taxes paid | 1,500 | 1,000 |
| VAT unclaimed | 6,000 | 8,000 |
| Depreciation | 43,000 | 25,000 |
4a. Gen and Admin expenses includes
| 2009 | 2008 | |
|---|---|---|
| Rent prepaid of | 3,000 | |
| Rent outstanding | 500 | 500 |
4b. Includes unrealized foreign exchange gain of but realized in 2009
| 2009 | 2008 | |
|---|---|---|
| 2,000 | 2,000 |
The GRA has agreed a capital allowance of GHC20,000 for year 2009 and GHC15,000 for year 2008.
Required:
Please advise management of Jamaa Mining Company Ltd on the tax due to the GRA for the years 2009 and 2008.
Find Related Questions by Tags, levels, etc.
- Tags: Capital Allowance, Corporate Taxation, Mining Company, Tax computation, Taxable Profit
- Level: Level 3
- Topic: Taxation and Operating Strategies in Business
- Series: AUG 2012
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