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  • 20 Marks

PT – Nov 2020 – L2 – Q4 – Corporate Tax Liabilities

Compute capital allowances for a manufacturing company over two years and explain the class or pool system of capital allowances.

Fafana Manufacturing Company Ltd, producers of special fruit juice, started business on 01/01/2016 and prepares accounts to 31 December each year. The company had constructed an office building, which was put into use on 01/01/2016. The following are the capital allowance written down values brought forward from pools of assets as at 01/01/2017:

Item Written Down Value (GH¢)
Pool 1 12,000
Pool 2 520,000
Pool 3 405,000
Office Building 540,000
Patent (acquired in 2016 for five years) 48,000

The company acquired the following chargeable assets for the business in 2017:

  • Factory Buildings GH¢958,000
  • Plant and Machinery GH¢2,500,000
  • File Cabinet GH¢10,000
  • Electric Ceiling and Standing Fans GH¢20,000
  • Window and Split Air Conditioners GH¢157,000
  • Motor Vehicles GH¢110,000
  • Photocopier GH¢14,000
  • LCD Television GH¢3,000
  • Visitors Chairs GH¢5,500
  • Office Chairs and Tables GH¢56,000

Some assets were disposed of in 2017, namely:

  • Computers and Accessories GH¢11,600
  • Standing Fans GH¢3,500

The company acquired the following chargeable assets for the business in 2018:

  • Toyota Salon Car GH¢70,000
  • Toyota Pick-up (only one) GH¢95,000
  • LCD Projector GH¢5,500
  • Data Handling Machine GH¢36,000
  • Trucks and Trailers GH¢54,000
  • Trademark (registered for 8 years) GH¢72,000

One of the vehicles was involved in an accident in 2018, and the company received GH¢45,000 as insurance compensation.

Required:
a) Determine the capital allowances for Fafana Manufacturing Company Ltd for 2017 and 2018 years of assessment. (16 marks)
b) Indicate how the class or pool system works with the treatment of capital allowances. (4 marks)

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  • 5 Marks

MA – Nov 2018 – L2 – Q1b – Divisional Performance

Evaluate the impact of scrapping an inefficient bus on the ROI of a transportation business unit.

Super Express Transport Company runs a fleet of buses on the Accra-Sunyani route, which is considered a business unit.

The following is an extract from the final accounts of the company as at the last operating year:

  • Stock of buses on that route at cost less depreciation is GH¢660,000.
  • Net operating profit is GH¢198,000.

One of the buses, bought three years ago at the cost of GH¢150,000, was not performing efficiently because it got involved in an accident just a year after it was purchased. Although the damage was minor, the Operations Manager suggested that the bus be scrapped, in spite of the fact that it earned a profit of GH¢6,000 in the year. Depreciation is at the rate of 20% p.a. on a straight-line basis.

Required:
Evaluate the effect of this proposal on the performance of the business unit, if Return on Investment (ROI) is used to measure the performance of subunits. (5 marks)

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  • 10 Marks

PSAF – Nov 2019 – L2 – Q5a -Public sector fiscal planning and budgeting

Discuss objectives for ensuring asset control systems and circumstances where accountability is discharged.

a) According to Section 52 of Act 921, “A principal Spending Officer of covered entity, State – Owned enterprise or public corporation shall be responsible for the asset of the institution under the care of the Principal Spending Officer and shall ensure that proper control systems exist for the custody and management of the Assets”.

Required:

i) State and explain TWO (2) objectives for which spending officers are required to ensure the existence of proper control systems. (4 marks)

ii) State and explain any THREE (3) circumstances under which the Principal Spending Officer is discharged of accountability over government stores. (6 marks)

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  • 20 Marks

PT – Nov 2020 – L2 – Q4 – Corporate Tax Liabilities

Compute capital allowances for a manufacturing company over two years and explain the class or pool system of capital allowances.

Fafana Manufacturing Company Ltd, producers of special fruit juice, started business on 01/01/2016 and prepares accounts to 31 December each year. The company had constructed an office building, which was put into use on 01/01/2016. The following are the capital allowance written down values brought forward from pools of assets as at 01/01/2017:

Item Written Down Value (GH¢)
Pool 1 12,000
Pool 2 520,000
Pool 3 405,000
Office Building 540,000
Patent (acquired in 2016 for five years) 48,000

The company acquired the following chargeable assets for the business in 2017:

  • Factory Buildings GH¢958,000
  • Plant and Machinery GH¢2,500,000
  • File Cabinet GH¢10,000
  • Electric Ceiling and Standing Fans GH¢20,000
  • Window and Split Air Conditioners GH¢157,000
  • Motor Vehicles GH¢110,000
  • Photocopier GH¢14,000
  • LCD Television GH¢3,000
  • Visitors Chairs GH¢5,500
  • Office Chairs and Tables GH¢56,000

Some assets were disposed of in 2017, namely:

  • Computers and Accessories GH¢11,600
  • Standing Fans GH¢3,500

The company acquired the following chargeable assets for the business in 2018:

  • Toyota Salon Car GH¢70,000
  • Toyota Pick-up (only one) GH¢95,000
  • LCD Projector GH¢5,500
  • Data Handling Machine GH¢36,000
  • Trucks and Trailers GH¢54,000
  • Trademark (registered for 8 years) GH¢72,000

One of the vehicles was involved in an accident in 2018, and the company received GH¢45,000 as insurance compensation.

Required:
a) Determine the capital allowances for Fafana Manufacturing Company Ltd for 2017 and 2018 years of assessment. (16 marks)
b) Indicate how the class or pool system works with the treatment of capital allowances. (4 marks)

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  • 5 Marks

MA – Nov 2018 – L2 – Q1b – Divisional Performance

Evaluate the impact of scrapping an inefficient bus on the ROI of a transportation business unit.

Super Express Transport Company runs a fleet of buses on the Accra-Sunyani route, which is considered a business unit.

The following is an extract from the final accounts of the company as at the last operating year:

  • Stock of buses on that route at cost less depreciation is GH¢660,000.
  • Net operating profit is GH¢198,000.

One of the buses, bought three years ago at the cost of GH¢150,000, was not performing efficiently because it got involved in an accident just a year after it was purchased. Although the damage was minor, the Operations Manager suggested that the bus be scrapped, in spite of the fact that it earned a profit of GH¢6,000 in the year. Depreciation is at the rate of 20% p.a. on a straight-line basis.

Required:
Evaluate the effect of this proposal on the performance of the business unit, if Return on Investment (ROI) is used to measure the performance of subunits. (5 marks)

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  • 10 Marks

PSAF – Nov 2019 – L2 – Q5a -Public sector fiscal planning and budgeting

Discuss objectives for ensuring asset control systems and circumstances where accountability is discharged.

a) According to Section 52 of Act 921, “A principal Spending Officer of covered entity, State – Owned enterprise or public corporation shall be responsible for the asset of the institution under the care of the Principal Spending Officer and shall ensure that proper control systems exist for the custody and management of the Assets”.

Required:

i) State and explain TWO (2) objectives for which spending officers are required to ensure the existence of proper control systems. (4 marks)

ii) State and explain any THREE (3) circumstances under which the Principal Spending Officer is discharged of accountability over government stores. (6 marks)

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