- 9 Marks
TAX – Nov 2020 – L1 – SA – Q2b – Taxation of Trusts and Estates
Compute the assessable profit for XYZ Unit Trust Scheme for the year ended December 31, 2018.
Question
In 2004, Chief Kris Uzodime applied to the Securities and Exchange Commission (SEC) for an approval to float XYZ Unit Trust Scheme. In 2005, XYZ Unit Trust Scheme secured an approval to deal in the business of a unit trust scheme.
Its statement of profit or loss for the year ended December 31, 2018, revealed the following:
| Description | Amount (N) |
|---|---|
| Investment income | |
| Rental income (gross) | 12,650,000 |
| Interest on bank deposit (gross) | 5,140,000 |
| Dividend received (gross) | 16,300,000 |
| Total Investment Income | 34,090,000 |
| Less: | |
| Staff salaries and wages | 9,300,000 |
| Manager’s remuneration (20% of gross income) | 6,818,000 |
| Other expenses | 1,020,000 |
| Bank charges and commission | 170,500 |
| Depreciation | 321,600 |
| Total Expenses | 17,630,100 |
| Net profit | 16,459,900 |
Additional information:
(i) Other expenses include:
- Loss on disposal of property, plant and equipment: N121,000
- Preliminary expenses: N210,000
- Office furniture acquired: N300,500
(ii) All the incomes were subjected to deductions of withholding tax.
Required:
Compute the assessable profit for the relevant assessment year.
(9 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Assessable Profit, Profit and Loss, Tax computation, Unit Trust Scheme, Withholding Tax
- Level: Level 1
- Topic: Taxation of Trusts and Estates
- Series: NOV 2020
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