Chargeable Profit – NBC Institute

ATAX – Nov 2016 – L3 – Q2c – Petroleum Profits Tax (PPT)

Compute and explain the significance of adjusted profit, chargeable profit, and chargeable tax for Joji Petroleum Company.

Question

Mr. Gillani Azurhi is considering investing in a petroleum company and has provided financial extracts of Joji Petroleum Company Limited for analysis.

Financial Data Provided:

Item	N’000
Current year capital allowances	6,080
Previous years’ capital allowances b/f	8,901
Custom duty	125
Royalties not included in accounts	1,638
Loss brought forward	6,250
Petroleum Profits Tax payable	1,336

Tax Rate: 85%

Required:

Compute and explain the significance of each of the following:

i) Adjusted profit (9 Marks)
ii) Chargeable profit (2 Marks)
iii) Chargeable tax (2 Marks)

Answer

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Tags: Adjusted Profit, Capital Allowance, Chargeable Profit, Chargeable Tax, Petroleum Tax
Level: Level 3

Topic: Petroleum Profits Tax (PPT)

AT – May 2018 – L3 – SB – Q2b – Petroleum Profits Tax (PPT)

Calculate assessable profit, chargeable profit, chargeable tax, and total tax liability for Ibrahim Oil Nigeria Ltd.

Question

Ibrahim Oil Nigeria Limited is an oil prospecting company which commenced production in commercial quantity in 2008. Its accounting year end is December 31. The company has provided the following Statement of Profit or Loss for the year ended December 31, 2016:

Description	Amount (N’000)
Revenue (value of oil produced)	2,455,200
Operating costs	(952,500)
Non-productive rent	(63,200)
Royalty on export sales	(14,775)
Depreciation of Property Plant and Equipment	(65,400)
Tangible drilling cost	(53,800)
Donation	(2,500)
Stamp duties	(1,250)
Repairs and renewal of machinery	(2,000)
Exploration and drilling costs	(100,300)
Custom duties on Plant and Machinery	(1,130)
Bad and doubtful debts	(26,500)
Pension and provident funds	(30,600)
Interest paid	(26,200)
General expenses	(11,050)
Income tax provision	(120,000)
Net Profit	983,995

Additional Information:

Exploration and drilling costs are itemized for various wells totaling 100,300 N’000.
A breakdown of bad debts shows 16,500 N’000 as specific provision.
Capital allowances are agreed at N88,100,000.

Required: Determine for the relevant assessment year, the following:

(i) Assessable Profit (9 Marks)
(ii) Chargeable Profit (3 Marks)
(iii) Chargeable Tax (2 Marks)
(iv) Total Tax Liability (1 Mark)

Answer

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Tags: Assessable Profit, Capital allowances, Chargeable Profit, Chargeable Tax, Export Sales, Petroleum Profits Tax Act
Level: Level 3

Topic: Petroleum Profits Tax (PPT)
Series: MAY 2018

AT – Nov 2017 – L3 – Q2 – Taxation of Companies

Compute assessable profit, chargeable profit, and tax for Skkye Petroleum Plc.

Question

Skkye Petroleum Plc. began operations over ten years ago and uses December 31 as its accounting date. The following details were extracted from the accounting records for the year ended December 31, 2016:

Crude oil exported – 3,500,000 barrels
Crude oil used locally – 1,200,000 barrels at N100 per barrel
Incidental income from petroleum operations – ₦26,750,000
Exploration and drilling costs – ₦30,000,000
Management and administration expenses – ₦240,500,000
Non-productive rents – ₦8,300,000
Provision for bad debts:
- General – ₦7,500,000
- Specific – ₦11,200,000
Depreciation – ₦7,250,000
Losses brought forward – ₦13,200,000

Qualifying capital expenditures:

Pipeline and storage tanks (March 2016, Continental Shelf, 190 meters depth) – ₦48,000,000
Plant and machinery (June 2014, Territorial Waters, 90 meters depth) – ₦63,800,000
Furniture and fittings (May 2013, Territorial Waters, 95 meters depth) – ₦21,000,000
Buildings (April 2015, onshore) – ₦71,000,000

Breakdown of Management and Administration expenses:

Donations to XYZ Political Party – ₦8,500,000
Expenditure on information regarding petroleum deposits – ₦4,700,000
Companies income tax of an associated company – ₦5,000,000
Interest on inter-company loans (market terms) – ₦2,600,000
Staff salaries – ₦175,000,000
Royalties on export sales – ₦6,200,000
Repairs and renewals on PPE for petroleum operations – ₦2,900,000
Rent for land/buildings under an Oil Prospecting License – ₦3,600,000
Other administrative expenses – ₦32,000,000

The international market price of crude oil in 2016 was USD $75 per barrel, with an exchange rate of USD $1 = ₦280.

Required:
a. Compute the assessable profit.
b. Compute the chargeable profit.
c. Compute the assessable tax.
d. Compute the chargeable tax.
e. Compute the Tertiary Education Tax.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Assessable Profit, Chargeable Profit, Petroleum Operations, Tax computation, Tertiary Education Tax
Level: Level 3

Topic: Taxation of Companies
Series: NOV 2017

ATAX – Nov 2016 – L3 – Q2c – Petroleum Profits Tax (PPT)

Compute and explain the significance of adjusted profit, chargeable profit, and chargeable tax for Joji Petroleum Company.

Question

Mr. Gillani Azurhi is considering investing in a petroleum company and has provided financial extracts of Joji Petroleum Company Limited for analysis.

Financial Data Provided:

Item	N’000
Current year capital allowances	6,080
Previous years’ capital allowances b/f	8,901
Custom duty	125
Royalties not included in accounts	1,638
Loss brought forward	6,250
Petroleum Profits Tax payable	1,336

Tax Rate: 85%

Required:

Compute and explain the significance of each of the following:

i) Adjusted profit (9 Marks)
ii) Chargeable profit (2 Marks)
iii) Chargeable tax (2 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Adjusted Profit, Capital Allowance, Chargeable Profit, Chargeable Tax, Petroleum Tax
Level: Level 3

Topic: Petroleum Profits Tax (PPT)

AT – May 2018 – L3 – SB – Q2b – Petroleum Profits Tax (PPT)

Calculate assessable profit, chargeable profit, chargeable tax, and total tax liability for Ibrahim Oil Nigeria Ltd.

Question

Description	Amount (N’000)
Revenue (value of oil produced)	2,455,200
Operating costs	(952,500)
Non-productive rent	(63,200)
Royalty on export sales	(14,775)
Depreciation of Property Plant and Equipment	(65,400)
Tangible drilling cost	(53,800)
Donation	(2,500)
Stamp duties	(1,250)
Repairs and renewal of machinery	(2,000)
Exploration and drilling costs	(100,300)
Custom duties on Plant and Machinery	(1,130)
Bad and doubtful debts	(26,500)
Pension and provident funds	(30,600)
Interest paid	(26,200)
General expenses	(11,050)
Income tax provision	(120,000)
Net Profit	983,995

Additional Information:

Exploration and drilling costs are itemized for various wells totaling 100,300 N’000.
A breakdown of bad debts shows 16,500 N’000 as specific provision.
Capital allowances are agreed at N88,100,000.

Required: Determine for the relevant assessment year, the following:

(i) Assessable Profit (9 Marks)
(ii) Chargeable Profit (3 Marks)
(iii) Chargeable Tax (2 Marks)
(iv) Total Tax Liability (1 Mark)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Assessable Profit, Capital allowances, Chargeable Profit, Chargeable Tax, Export Sales, Petroleum Profits Tax Act
Level: Level 3

Topic: Petroleum Profits Tax (PPT)
Series: MAY 2018

AT – Nov 2017 – L3 – Q2 – Taxation of Companies

Compute assessable profit, chargeable profit, and tax for Skkye Petroleum Plc.

Question

Crude oil exported – 3,500,000 barrels
Crude oil used locally – 1,200,000 barrels at N100 per barrel
Incidental income from petroleum operations – ₦26,750,000
Exploration and drilling costs – ₦30,000,000
Management and administration expenses – ₦240,500,000
Non-productive rents – ₦8,300,000
Provision for bad debts:
- General – ₦7,500,000
- Specific – ₦11,200,000
Depreciation – ₦7,250,000
Losses brought forward – ₦13,200,000

Qualifying capital expenditures:

Pipeline and storage tanks (March 2016, Continental Shelf, 190 meters depth) – ₦48,000,000
Plant and machinery (June 2014, Territorial Waters, 90 meters depth) – ₦63,800,000
Furniture and fittings (May 2013, Territorial Waters, 95 meters depth) – ₦21,000,000
Buildings (April 2015, onshore) – ₦71,000,000

Breakdown of Management and Administration expenses:

Donations to XYZ Political Party – ₦8,500,000
Expenditure on information regarding petroleum deposits – ₦4,700,000
Companies income tax of an associated company – ₦5,000,000
Interest on inter-company loans (market terms) – ₦2,600,000
Staff salaries – ₦175,000,000
Royalties on export sales – ₦6,200,000
Repairs and renewals on PPE for petroleum operations – ₦2,900,000
Rent for land/buildings under an Oil Prospecting License – ₦3,600,000
Other administrative expenses – ₦32,000,000

The international market price of crude oil in 2016 was USD $75 per barrel, with an exchange rate of USD $1 = ₦280.

Required:
a. Compute the assessable profit.
b. Compute the chargeable profit.
c. Compute the assessable tax.
d. Compute the chargeable tax.
e. Compute the Tertiary Education Tax.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Assessable Profit, Chargeable Profit, Petroleum Operations, Tax computation, Tertiary Education Tax
Level: Level 3

Topic: Taxation of Companies
Series: NOV 2017

Question Tag: Chargeable Profit

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ATAX – Nov 2016 – L3 – Q2c – Petroleum Profits Tax (PPT)

Compute and explain the significance of adjusted profit, chargeable profit, and chargeable tax for Joji Petroleum Company.

AT – May 2018 – L3 – SB – Q2b – Petroleum Profits Tax (PPT)

Calculate assessable profit, chargeable profit, chargeable tax, and total tax liability for Ibrahim Oil Nigeria Ltd.

AT – Nov 2017 – L3 – Q2 – Taxation of Companies

Compute assessable profit, chargeable profit, and tax for Skkye Petroleum Plc.

ATAX – Nov 2016 – L3 – Q2c – Petroleum Profits Tax (PPT)

Compute and explain the significance of adjusted profit, chargeable profit, and chargeable tax for Joji Petroleum Company.

AT – May 2018 – L3 – SB – Q2b – Petroleum Profits Tax (PPT)

Calculate assessable profit, chargeable profit, chargeable tax, and total tax liability for Ibrahim Oil Nigeria Ltd.

AT – Nov 2017 – L3 – Q2 – Taxation of Companies

Compute assessable profit, chargeable profit, and tax for Skkye Petroleum Plc.

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Question Tag: Chargeable Profit

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ATAX – Nov 2016 – L3 – Q2c – Petroleum Profits Tax (PPT)

Compute and explain the significance of adjusted profit, chargeable profit, and chargeable tax for Joji Petroleum Company.

You're reporting an error for "ATAX – Nov 2016 – L3 – Q2c – Petroleum Profits Tax (PPT)"

AT – May 2018 – L3 – SB – Q2b – Petroleum Profits Tax (PPT)

Calculate assessable profit, chargeable profit, chargeable tax, and total tax liability for Ibrahim Oil Nigeria Ltd.

You're reporting an error for "AT – May 2018 – L3 – SB – Q2b – Petroleum Profits Tax (PPT)"

AT – Nov 2017 – L3 – Q2 – Taxation of Companies

Compute assessable profit, chargeable profit, and tax for Skkye Petroleum Plc.

You're reporting an error for "AT – Nov 2017 – L3 – Q2 – Taxation of Companies"

ATAX – Nov 2016 – L3 – Q2c – Petroleum Profits Tax (PPT)

Compute and explain the significance of adjusted profit, chargeable profit, and chargeable tax for Joji Petroleum Company.

You're reporting an error for "ATAX – Nov 2016 – L3 – Q2c – Petroleum Profits Tax (PPT)"

AT – May 2018 – L3 – SB – Q2b – Petroleum Profits Tax (PPT)

Calculate assessable profit, chargeable profit, chargeable tax, and total tax liability for Ibrahim Oil Nigeria Ltd.

You're reporting an error for "AT – May 2018 – L3 – SB – Q2b – Petroleum Profits Tax (PPT)"

AT – Nov 2017 – L3 – Q2 – Taxation of Companies

Compute assessable profit, chargeable profit, and tax for Skkye Petroleum Plc.

You're reporting an error for "AT – Nov 2017 – L3 – Q2 – Taxation of Companies"

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