Corporate Income – NBC Institute

AT – Nov 2015 – L3 – Q1b – Business income – Corporate income tax

Circumstances under which shares are not considered chargeable assets for capital gains tax purposes.

Question

Shares of a resident company are classified as chargeable assets under capital gains tax. Under what circumstances will shares not be described as chargeable assets under capital gains tax provision?

Answer

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Tags: Capital gains tax, Chargeable assets, Corporate Income, Exemptions, Shares
Level: Level 3

Topic: Business income - Corporate income tax
Series: NOV 2015

AT – May 2017 – L3 – Q4c – Business income – Corporate income tax

Calculate the capital allowance for the year 2016 after the exchange of assets, and discuss the treatment of goodwill.

Question

c) Sakote Ltd, a trading company, has the following extracts from its financial records:

It bought a 4 X 4 Vehicle for an amount of GH¢225,000.00 in the year 2015. The cost of the vehicle was limited to an amount of GH¢75,000 for capital allowance purposes in the year 2015.
It also put up a building at a cost of GH¢150,000.00 in the same year. The cost of the land was GH¢20,000 and GH¢130,000 was the cost of the building.
The Company accordingly informed the Commissioner-General about putting the assets into use and in the generation of its income in 2015 year of assessment.
In the year 2016, it exchanged the vehicle for 4 plots of land. The value of the plots of land agreed with the landowners was GH¢220,000. The exchange was deemed satisfactory to both parties, and documentations were carried through.

Required:

i) Calculate the amount of capital allowance claimable for 2016 year of assessment by Sakote Ltd. (7 marks)
ii) Sakote Ltd paid for Goodwill amounting to GH¢10,000 in 2016 and intends to grant capital allowance on the value of the goodwill. Explain whether or not this arrangement is in accordance with the tax laws. (3 marks)
(Total: 10 marks)

Answer

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Tags: Asset exchange, Capital Allowance, Corporate Income, Depreciable assets, Tax implications
Level: Level 3

Topic: Business income - Corporate income tax
Series: MAY 2017

AT – Nov 2016 – L3 – Q4b – Business income – Corporate income tax

Calculate the tax payable by Bambara Ltd and comment on the treatment of specific income and expenses

Question

b) Bambara Ltd has the following summarized income statement relating to the 2015 year of assessment:

	GH¢
Revenue	100,000
Cost of Sales	65,000
Gross Profit	35,000
Operating expenses	20,000
Net profit	15,000

Upon a closer scrutiny, the following came up:

i) Dividend net of withholding tax received from A Ltd was GH¢10,000. The amount received was added to revenue above. Bambara Ltd has 10% equity interest in A Ltd.
ii) Bad debts of GH¢1,000 were recovered. This was adjusted to the Income Surplus Account.
iii) A penalty of GH¢2,000 was paid and has been added to operating costs to determine the net profit as disclosed.
iv) Capital allowance agreed with Ghana Revenue Authority was GH¢1,000, and depreciation of GH¢1,300 was added to operating costs.
v) Taxes paid in previous quarters amounting to GH¢1,200 were added to operating costs to determine the net profit.
vi) It came to light that an amount of GH¢11,400 net of 5% withholding tax relating to the supply of goods was not brought into the accounts at all on account of omission. The withholding tax was certified correct.

Required:
Determine the tax payable by Bambara Ltd and comment on any four reasons for the inclusion and/or non-inclusion of the transactions in the determination of income. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Adjustments, Corporate Income, Tax computation
Level: Level 3

Topic: Business income - Corporate income tax
Series: NOV 2016

AT – Nov 2015 – L3 – Q1b – Business income – Corporate income tax

Circumstances under which shares are not considered chargeable assets for capital gains tax purposes.

Question

Shares of a resident company are classified as chargeable assets under capital gains tax. Under what circumstances will shares not be described as chargeable assets under capital gains tax provision?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital gains tax, Chargeable assets, Corporate Income, Exemptions, Shares
Level: Level 3

Topic: Business income - Corporate income tax
Series: NOV 2015

AT – May 2017 – L3 – Q4c – Business income – Corporate income tax

Calculate the capital allowance for the year 2016 after the exchange of assets, and discuss the treatment of goodwill.

Question

c) Sakote Ltd, a trading company, has the following extracts from its financial records:

It bought a 4 X 4 Vehicle for an amount of GH¢225,000.00 in the year 2015. The cost of the vehicle was limited to an amount of GH¢75,000 for capital allowance purposes in the year 2015.
It also put up a building at a cost of GH¢150,000.00 in the same year. The cost of the land was GH¢20,000 and GH¢130,000 was the cost of the building.
The Company accordingly informed the Commissioner-General about putting the assets into use and in the generation of its income in 2015 year of assessment.
In the year 2016, it exchanged the vehicle for 4 plots of land. The value of the plots of land agreed with the landowners was GH¢220,000. The exchange was deemed satisfactory to both parties, and documentations were carried through.

Required:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset exchange, Capital Allowance, Corporate Income, Depreciable assets, Tax implications
Level: Level 3

Topic: Business income - Corporate income tax
Series: MAY 2017

AT – Nov 2016 – L3 – Q4b – Business income – Corporate income tax

Calculate the tax payable by Bambara Ltd and comment on the treatment of specific income and expenses

Question

b) Bambara Ltd has the following summarized income statement relating to the 2015 year of assessment:

	GH¢
Revenue	100,000
Cost of Sales	65,000
Gross Profit	35,000
Operating expenses	20,000
Net profit	15,000

Upon a closer scrutiny, the following came up:

Required:
Determine the tax payable by Bambara Ltd and comment on any four reasons for the inclusion and/or non-inclusion of the transactions in the determination of income. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Adjustments, Corporate Income, Tax computation
Level: Level 3

Topic: Business income - Corporate income tax
Series: NOV 2016

Question Tag: Corporate Income

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AT – Nov 2015 – L3 – Q1b – Business income – Corporate income tax

Circumstances under which shares are not considered chargeable assets for capital gains tax purposes.

AT – May 2017 – L3 – Q4c – Business income – Corporate income tax

Calculate the capital allowance for the year 2016 after the exchange of assets, and discuss the treatment of goodwill.

AT – Nov 2016 – L3 – Q4b – Business income – Corporate income tax

Calculate the tax payable by Bambara Ltd and comment on the treatment of specific income and expenses

AT – Nov 2015 – L3 – Q1b – Business income – Corporate income tax

Circumstances under which shares are not considered chargeable assets for capital gains tax purposes.

AT – May 2017 – L3 – Q4c – Business income – Corporate income tax

Calculate the capital allowance for the year 2016 after the exchange of assets, and discuss the treatment of goodwill.

AT – Nov 2016 – L3 – Q4b – Business income – Corporate income tax

Calculate the tax payable by Bambara Ltd and comment on the treatment of specific income and expenses

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AT – Nov 2015 – L3 – Q1b – Business income – Corporate income tax

Circumstances under which shares are not considered chargeable assets for capital gains tax purposes.

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AT – May 2017 – L3 – Q4c – Business income – Corporate income tax

Calculate the capital allowance for the year 2016 after the exchange of assets, and discuss the treatment of goodwill.

You're reporting an error for "AT – May 2017 – L3 – Q4c – Business income – Corporate income tax"

AT – Nov 2016 – L3 – Q4b – Business income – Corporate income tax

Calculate the tax payable by Bambara Ltd and comment on the treatment of specific income and expenses

You're reporting an error for "AT – Nov 2016 – L3 – Q4b – Business income – Corporate income tax"

AT – Nov 2015 – L3 – Q1b – Business income – Corporate income tax

Circumstances under which shares are not considered chargeable assets for capital gains tax purposes.

You're reporting an error for "AT – Nov 2015 – L3 – Q1b – Business income – Corporate income tax"

AT – May 2017 – L3 – Q4c – Business income – Corporate income tax

Calculate the capital allowance for the year 2016 after the exchange of assets, and discuss the treatment of goodwill.

You're reporting an error for "AT – May 2017 – L3 – Q4c – Business income – Corporate income tax"

AT – Nov 2016 – L3 – Q4b – Business income – Corporate income tax

Calculate the tax payable by Bambara Ltd and comment on the treatment of specific income and expenses

You're reporting an error for "AT – Nov 2016 – L3 – Q4b – Business income – Corporate income tax"

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