- 8 Marks
TX – May 2019 – L3 – Q5b – Petroleum Operations
Compute the royalty payable by a petroleum company and discuss the tax implications of production costs and the relevance of government interest in upstream operations.
Question
b) The following relates to Ablorh Ltd from petroleum operations relating to 2017 year of assessment:
Production (in barrels): 100,000,000
Selling Price per barrel ($): 100
Production cost per barrel ($): 50
Capital allowance agreed ($): 800,000
Required: i) Compute the royalty payable to the Government of Ghana by Ablorh Ltd and state the tax implication of production cost on Royalty. (5 marks)
ii) Explain THREE (3) relevance of initial interest of Government in the Upstream Petroleum Operations. (3 marks)
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