- 11 Marks
ATAX – Nov 2016 – L3 – Q6b – Petroleum Profits Tax (PPT)
Determines assessable profit, chargeable profit, assessable tax, and chargeable tax for Bivenette Petroleum Company Limited.
Question
Bivenette Petroleum Company Limited has been in the oil prospecting business for some years. Extracts from its financial statements for the year ended December 31, 2013 show the following information:
Additional Information:
- Petroleum Profits Tax rate: 85%
- Interest paid includes N12,000,000 paid to an affiliated company.
- Capital allowances agreed at N253,750,000.
- Operating costs include N302,000,000 paid to a company for information on oil prospect in Adamawa State.
- The company is entitled to an Investment Allowance of N173,000,000.
You are required to:
- Determine the Assessable Profit, Chargeable Profit, Assessable Tax, and Chargeable Tax of the company for the relevant Year of Assessment. (11 Marks)
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