- 20 Marks
TAX – Nov 2018 – L2 – SB – Q3 – Taxation of Specialized Businesses
Advise on the cessation of operations for J&P Nigeria Limited and compute assessable profits.
Question
J & P (Nigeria) Limited, a construction and civil engineering company, has been in business for many years. The harsh economic climate in the country resulted in a decline in the profits of the company which necessitated the decision of the board of directors to either cease operations on December 31, 2017 or March 31, 2018.
Recent accounts adjusted for tax purposes revealed the following adjusted profits:
| Year ended | Adjusted Profit (N) |
|---|---|
| July 31, 2013 | 5,460,000 |
| July 31, 2014 | 4,970,000 |
| July 31, 2015 | 4,320,000 |
| July 31, 2016 | 3,450,000 |
| July 31, 2017 | 1,875,000 |
| 8 Months ended March 31, 2018 | 750,000 |
Required:
Advise the board of directors on whether or not to cease operations on December 31, 2017, or March 31, 2018. Show all workings.
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