Tax – NBC Institute

BMF – Nov 2014 – L1 – SA – Q2 – Nature of Business, Types, and Objectives

Identifies the inappropriate social objective for a business.

Question

Which of the following should NOT be the social objective of a business organisation?

A. Pay tax as at when due
B. Obey laws enacted by the National Assembly
C. Keep clean environment
D. Encourage tax avoidance
E. Encourage tax evasion

Answer

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Tags: Business, Ethics, Law, Social Objectives, Tax
Level: Level 1

Topic: Nature of Business, Types, and Objectives
Series: NOV 2014

FR – Aug 2022 – L2 – Q3 – Preparation of Financial Statements

Prepare the Statement of Profit or Loss and Financial Position for Morontuo Plc for the year ended 31 December 2021, along with all relevant workings.

Question

Morontuo Plc deals in electrical and other household appliances. It has a fleet of vehicles used in the distribution of these goods. The company is preparing its financial statements for the year ended 31 December 2021. Below is the trial balance for the period:

Additional Information:

i) The company repairs goods returned by customers for minor or major defects. It estimates that 25% of goods sold would have minor defects and 15% would have major defects. Estimated repairs cost for minor and major defects is GH¢8 million and GH¢2 million respectively. This effect has not been incorporated in the trial balance.

ii) Morontuo rents some of its vehicles and routinely sells them after some time. Vehicles X and Y (GH¢3.5 million and GH¢2 million respectively) used for rental services were acquired on 1 January 2021. Vehicle Y was sold on 1 December 2021 for GH¢1.88 million, which remains unpaid. The effects of the decision to sell the vehicles have not been incorporated.

iii) Suspense account represents interest and principal payments on a loan from Alpha Bank contracted on 1 July 2021. The loan is repayable in monthly instalments of GH¢1 million over 3 years, with 24% annual interest.

iv) Inventory includes slow-moving finished goods costing GH¢15 million. These were sold at 98% of their carrying amounts in January 2022.

v) Current tax for the year is estimated at GH¢15.8 million.

Required:

Prepare the Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2021 and the Statement of Financial Position as at that date in accordance with IFRS. Include all relevant workings.

Answer

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Tags: Depreciation, Financial Position, Inventory, Loan Repayment, Profit or Loss Statement, Tax
Level: Level 2

Topic: Preparation of Financial Statements
Series: AUG 2022

CR – Mar 2023 – L3 – Q3b – IAS 12

Recommend the correct financial reporting treatment for foreign-currency denominated inventory and related deferred tax.

Question

Sadio Plc imports wheat from Ukraine for wholesale distribution. On 31 October 2022, Sadio purchased goods for €7.2 million cash at an exchange rate of GH¢1 = €0.12. At 31 October 2022, the net realisable value (NRV) of the inventory was estimated at €7.0 million, and the exchange rate at this date was GH¢1 = €0.14. Sadio’s directors recorded the inventory at its purchase cost in the financial statements for the year ended 31 October 2022.

Sadio only receives tax relief for any inventory loss when the related item is sold. The company’s tax rate at 31 October 2022 was 20%, but a revised rate of 25% was introduced on 18 November 2022. Assume that Sadio has sufficient taxable future profit.

Required:
Recommend the correct financial reporting treatment of the above in Sadio’s financial statements for the year ended 31 October 2022.

Answer

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Tags: Foreign Currency, Inventory, Tax, Translation
Level: Level 3

Topic: IAS 12: Income taxes
Series: MAR 2023

AT – Nov 2017 – L3 – Q5b – Business income – Corporate income tax

Computing loss to be carried forward and discussing dividend tax treatment.

Question

Kofas Ltd is a mining company incorporated in Ghana. In the 2016 year of assessment, the company furnished the Ghana Revenue Authority with the following:

Item	GH¢
Revenue	10,000,000
Cost	2,500,000
Gross Profit	7,500,000
Operating expenses	8,100,000
Net Profit	(600,000)

Additional Information:

Foopo Ltd paid a dividend of GH¢50,000 to Kofas Ltd, which was included in the revenue. Kofas Ltd holds 25% of the shares in Foopo Ltd.
The operating expenses of GH¢8,100,000 include the following:
- Filing penalties: GH¢1,000
- Capital work in progress: GH¢200,000
- Depreciation: GH¢100,000
It was agreed with the Ghana Revenue Authority that the capital allowance for the 2016 year of assessment would be GH¢300,000. This allowance is yet to be factored into the computation.

Required:
i) Compute the loss to be carried forward. (5 marks)
ii) Comment on the tax treatment of the dividend paid by Foopo Ltd. (2 marks)
iii) How is unrelieved loss in the mining sector treated? (1 mark)
iv) Under what circumstances will a dividend from petroleum operations be paid to the Government of Ghana? (2 marks)

Answer

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Tags: Dividend, Loss carry forward, Petroleum Tax, Tax
Level: Level 3

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

BMF – Nov 2014 – L1 – SA – Q2 – Nature of Business, Types, and Objectives

Identifies the inappropriate social objective for a business.

Question

Which of the following should NOT be the social objective of a business organisation?

A. Pay tax as at when due
B. Obey laws enacted by the National Assembly
C. Keep clean environment
D. Encourage tax avoidance
E. Encourage tax evasion

Answer

Find Related Questions by Tags, levels, etc.

Tags: Business, Ethics, Law, Social Objectives, Tax
Level: Level 1

Topic: Nature of Business, Types, and Objectives
Series: NOV 2014

FR – Aug 2022 – L2 – Q3 – Preparation of Financial Statements

Prepare the Statement of Profit or Loss and Financial Position for Morontuo Plc for the year ended 31 December 2021, along with all relevant workings.

Question

Additional Information:

iv) Inventory includes slow-moving finished goods costing GH¢15 million. These were sold at 98% of their carrying amounts in January 2022.

v) Current tax for the year is estimated at GH¢15.8 million.

Required:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Depreciation, Financial Position, Inventory, Loan Repayment, Profit or Loss Statement, Tax
Level: Level 2

Topic: Preparation of Financial Statements
Series: AUG 2022

CR – Mar 2023 – L3 – Q3b – IAS 12

Recommend the correct financial reporting treatment for foreign-currency denominated inventory and related deferred tax.

Question

Required:
Recommend the correct financial reporting treatment of the above in Sadio’s financial statements for the year ended 31 October 2022.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Foreign Currency, Inventory, Tax, Translation
Level: Level 3

Topic: IAS 12: Income taxes
Series: MAR 2023

AT – Nov 2017 – L3 – Q5b – Business income – Corporate income tax

Computing loss to be carried forward and discussing dividend tax treatment.

Question

Kofas Ltd is a mining company incorporated in Ghana. In the 2016 year of assessment, the company furnished the Ghana Revenue Authority with the following:

Item	GH¢
Revenue	10,000,000
Cost	2,500,000
Gross Profit	7,500,000
Operating expenses	8,100,000
Net Profit	(600,000)

Additional Information:

Foopo Ltd paid a dividend of GH¢50,000 to Kofas Ltd, which was included in the revenue. Kofas Ltd holds 25% of the shares in Foopo Ltd.
The operating expenses of GH¢8,100,000 include the following:
- Filing penalties: GH¢1,000
- Capital work in progress: GH¢200,000
- Depreciation: GH¢100,000
It was agreed with the Ghana Revenue Authority that the capital allowance for the 2016 year of assessment would be GH¢300,000. This allowance is yet to be factored into the computation.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Dividend, Loss carry forward, Petroleum Tax, Tax
Level: Level 3

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

Question Tag: Tax

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BMF – Nov 2014 – L1 – SA – Q2 – Nature of Business, Types, and Objectives

Identifies the inappropriate social objective for a business.

FR – Aug 2022 – L2 – Q3 – Preparation of Financial Statements

Prepare the Statement of Profit or Loss and Financial Position for Morontuo Plc for the year ended 31 December 2021, along with all relevant workings.

CR – Mar 2023 – L3 – Q3b – IAS 12

Recommend the correct financial reporting treatment for foreign-currency denominated inventory and related deferred tax.

AT – Nov 2017 – L3 – Q5b – Business income – Corporate income tax

Computing loss to be carried forward and discussing dividend tax treatment.

BMF – Nov 2014 – L1 – SA – Q2 – Nature of Business, Types, and Objectives

Identifies the inappropriate social objective for a business.

FR – Aug 2022 – L2 – Q3 – Preparation of Financial Statements

Prepare the Statement of Profit or Loss and Financial Position for Morontuo Plc for the year ended 31 December 2021, along with all relevant workings.

CR – Mar 2023 – L3 – Q3b – IAS 12

Recommend the correct financial reporting treatment for foreign-currency denominated inventory and related deferred tax.

AT – Nov 2017 – L3 – Q5b – Business income – Corporate income tax

Computing loss to be carried forward and discussing dividend tax treatment.

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BMF – Nov 2014 – L1 – SA – Q2 – Nature of Business, Types, and Objectives

Identifies the inappropriate social objective for a business.

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FR – Aug 2022 – L2 – Q3 – Preparation of Financial Statements

Prepare the Statement of Profit or Loss and Financial Position for Morontuo Plc for the year ended 31 December 2021, along with all relevant workings.

You're reporting an error for "FR – Aug 2022 – L2 – Q3 – Preparation of Financial Statements"

CR – Mar 2023 – L3 – Q3b – IAS 12

Recommend the correct financial reporting treatment for foreign-currency denominated inventory and related deferred tax.

You're reporting an error for "CR – Mar 2023 – L3 – Q3b – IAS 12"

AT – Nov 2017 – L3 – Q5b – Business income – Corporate income tax

Computing loss to be carried forward and discussing dividend tax treatment.

You're reporting an error for "AT – Nov 2017 – L3 – Q5b – Business income – Corporate income tax"

BMF – Nov 2014 – L1 – SA – Q2 – Nature of Business, Types, and Objectives

Identifies the inappropriate social objective for a business.

You're reporting an error for "BMF – Nov 2014 – L1 – SA – Q2 – Nature of Business, Types, and Objectives"

FR – Aug 2022 – L2 – Q3 – Preparation of Financial Statements

Prepare the Statement of Profit or Loss and Financial Position for Morontuo Plc for the year ended 31 December 2021, along with all relevant workings.

You're reporting an error for "FR – Aug 2022 – L2 – Q3 – Preparation of Financial Statements"

CR – Mar 2023 – L3 – Q3b – IAS 12

Recommend the correct financial reporting treatment for foreign-currency denominated inventory and related deferred tax.

You're reporting an error for "CR – Mar 2023 – L3 – Q3b – IAS 12"

AT – Nov 2017 – L3 – Q5b – Business income – Corporate income tax

Computing loss to be carried forward and discussing dividend tax treatment.

You're reporting an error for "AT – Nov 2017 – L3 – Q5b – Business income – Corporate income tax"

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