- 20 Marks
TAX – Nov 2023 – L2 – Q2 – Tax Administration and Enforcement
Discuss the tax law provisions for a change in accounting year end, revenue practice, and compute assessable profits.
Question
Forward Nigeria Limited, a Nigerian manufacturing company, has been operating for several years with an accounting year-end on June 30. The company recently decided to change its year-end to September 30. The adjusted profits for the relevant periods are as follows:
| Period | Adjusted Profit (N) |
|---|---|
| Year ended June 30, 2014 | 2,700,000 |
| Year ended June 30, 2015 | 3,300,000 |
| Period ended September 30, 2015 | 1,500,000 |
| Year ended September 30, 2016 | 4,200,000 |
| Year ended September 30, 2017 | 3,600,000 |
Additional Information:
- Income overstated:
- June 30, 2015: N250,000
- September 30, 2016: N280,000
- Expenditure understated:
- June 30, 2014: N160,000
- September 30, 2017: N150,000
Required: a. Explain the tax law provisions for a business changing its accounting year-end. (5 Marks)
b. Describe the Revenue practice related to these provisions. (3 Marks)
c. Compute the assessable profits for all affected years of assessment, considering the tax law and Revenue practice. (12 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Accounting Year-End, Adjusted Profits, Assessable Profits, Revenue Practice, Tax law
- Level: Level 2
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