- 5 Marks
TF – May 2018 – L3 – Q5a – Petroleum Operations
Computation of revenue from oil sales and asset disposal for Lanandam Ltd.
Question
The following data is relevant to the upstream petroleum operations of Lanandam Ltd for 2017 year of assessment.
200,000 barrels of oil sold internationally at $68 per barrel
An asset bought at the inception of petroleum operations was sold for $1,000,000 in 2017
50,000 barrels lifted and sold to its parent company in the United States at an agreed price of $56 per barrel. The price ruling on the international market on the day of lifting was $60 per barrel.
Required:
Compute the revenue from the above and comment on the treatment of the sale of the petroleum assets as indicated above.
Find Related Questions by Tags, levels, etc.
- Tags: Asset Sales, Oil Sales, Petroleum Revenue, Tax Planning
- Level: Level 3
- Topic: Petroleum operations
- Series: MAY 2018
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