Series: NOV 2020

Search 500 + past questions and counting.

  • Filter by Professional Bodies

  • Filter by Subject

  • Filter by Series

  • Filter by Topics

  • Filter by Levels

  • 20 Marks

AT- Nov 2022 – L3 – Q4 – Regulatory Environment for Corporate Reporting

Discuss the significance, guiding actions, inconsistencies, compliance areas, and dispute resolution in transfer pricing under Nigeria’s 2018 regulations.

Transfer pricing has become a topical issue in the world of taxation in recent years. This trend is partly driven by the need to prevent fiscal evasion and avoid economic double taxation. Various governments, both in developed and emerging countries, have continued to issue regulations to guide the operations of transfer pricing systems within their jurisdictions.

In Nigeria, the first step toward establishing a legal framework for regulating transfer pricing took place in August 2012, with the enactment of Income Tax (Transfer Pricing) Regulations Number 1, 2012. Due to shortcomings in the implementation of this regulation, it was revoked, and the Income Tax (Transfer Pricing) Regulations 2018 was subsequently enacted.

One critical principle, enshrined in various transfer pricing regulations, that every taxpayer must comply with when dealing with transactions between related entities is the arm’s length principle. This principle has gained significant attention among academics, regulatory institutions, and professionals, with ongoing debate surrounding its application.

Required:

a. Explain the significance of transfer pricing to both the taxpayers and tax authorities. (2 Marks)

b. In complying with the arm’s length principle, discuss two guiding actions which enterprises and multinationals must follow in their intercompany dealings. (3 Marks)

c. Identify and explain four methods multinational companies might use in financial dealings with associated or subsidiary entities that deviate from the arm’s length principle. (6 Marks)

d. In the administration of the Transfer Pricing Regulations 2018, highlight and discuss three fundamental compliance areas for taxpayers and tax practitioners. (6 Marks)

e. Explain the resolution process for disputes that arise between a taxpayer and tax authorities under the Transfer Pricing Regulations 2018. (3 Marks)

(Total: 20 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "AT- Nov 2022 – L3 – Q4 – Regulatory Environment for Corporate Reporting"

  • 20 Marks

CR – Nov 2017 – L3 – Q3 – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)

Evaluate Funda Plc's accounting policies for specific transactions, recommending adjustments as per IFRS where appropriate.

Funda Plc. is a listed utility service company in Nigeria providing water, electricity, and cable services. The directors prepared draft financial statements for the year ended June 30, 2017, following IFRS guidelines to support a loan application. Employees, owning 5% of ordinary shares, raised concerns about certain accounting policies applied by Funda Plc.

The draft income statement for the year ended June 30, 2017, is as follows:

N’m
Revenue 410.0
Cost of Sales (275.0)
Gross Profit 135.0
Other Operating Costs (65.0)
Profit Before Taxation 70.0

Employee Representatives’ Queries on Accounting Policies:

  1. Sale of Water Filters
    Funda Plc. sold 30 industrial water filters to a steelmaker, offering a 20% discount and granting the steelmaker a put option to repurchase the filters at 35% of the purchase price after six years, despite the filters’ expected ten-year life. Funda Plc. has recognized the entire revenue upfront.
  2. Connection Fees
    A refundable connection fee is charged for electricity connections, to be returned upon customer disconnection. No minimum notice is required, and costs can be deducted from refunds. The fee was fully recognized in the year as revenue.
  3. Activation Fees
    Non-refundable activation fees for digital cable services were fully recognized in revenue.
  4. Deposits for Domestic Electrical Goods
    Customers place a 25% deposit on orders, with the balance payable on delivery. Deposits are retained if orders are canceled but refunded if Funda Plc. fails to deliver. Revenue includes N10 million from deposits, with 90% of orders fulfilled.

Required:
Prepare a report explaining the suitability of Funda Plc.’s accounting policies for each transaction and recommend the appropriate IFRS treatment where necessary.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "CR – Nov 2017 – L3 – Q3 – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)"

  • 6 Marks

BL – Nov 2020 – L1 – SB – Q1d – Company Law

List powers exercised by the Annual General Meeting (AGM) of a company.

One of the two organs of a company is the general meeting of members.

Required:
State FOUR powers of the Annual General Meeting.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "BL – Nov 2020 – L1 – SB – Q1d – Company Law"

  • 5 Marks

BL – Nov 2020 – L1 – SB – Q6c – Partnership Law

Assess the legality of different partnership arrangements.

Comment on the legality of the following relationships operating as partnerships:

i. A partnership of 16 persons established for charitable purposes
ii. Adex cooperative society consisting of 500 members
iii. Black and Blue law firm consisting of 31 lawyers
iv. Stone Partnership firm comprising Segun aged 28, Tunde aged 17
v. A partnership of volunteers for the purpose of helping persons displaced by flood.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "BL – Nov 2020 – L1 – SB – Q6c – Partnership Law"

  • 5 Marks

BL – Nov 2020 – L1 – SB – Q6b – Law of Contract

Define express terms, implied terms, conditions, and warranties in a contract.

Contractual agreements usually contain terms that are different in nature and importance.

Required:
Define the following terms:
i. Express terms
ii. Implied terms
iii. Conditions
iv. Warranties

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "BL – Nov 2020 – L1 – SB – Q6b – Law of Contract"

  • 5 Marks

BL – Nov 2020 – L1 – SB – Q6a – The Nigerian Legal System

List tests to determine intent to steal during taking or conversion.

Taking or conversion with intent to defraud is an element of stealing.

Required:
State FIVE tests of determining whether or not an accused has an intention to steal at the time of taking or converting a thing.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "BL – Nov 2020 – L1 – SB – Q6a – The Nigerian Legal System"

  • 5 Marks

BL – Nov 2020 – L1 – SB – Q5d – Negotiable Instruments

Explain different cheque crossing types and define negotiable instruments.

Crossing of cheques has legal implications in banking transactions, and a cheque is a type of negotiable instrument.

Required:
i. A cheque instruction to “pay Ronke the sum of N50,000.00” without crossing the face of the cheque with two parallel lines.
ii. “Pay Andrew N100,000” with two parallel lines traversing the face of the cheque.
iii. “Pay Mary N150,000” with two parallel lines with Congo Bank written in between the two parallel lines on the face of the cheque.
iv. “Pay Ngozi N200,000” and by cheque with two parallel lines and the words “account payee only” written in between the two parallel lines.
v. Define negotiable instruments.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "BL – Nov 2020 – L1 – SB – Q5d – Negotiable Instruments"

  • 5 Marks

BL – Nov 2020 – L1 – SB – Q5c – Agency Law

List the duties of an agent in an agency contract.

Parties under a contract of agency have certain rights and duties.

Required:
State FIVE duties of an agent under a contract of agency.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "BL – Nov 2020 – L1 – SB – Q5c – Agency Law"

  • 5 Marks

BL – Nov 2020 – L1 – SB – Q5b – Employment Law

Define an employment contract and list grounds for dismissal by an employer.

Contracts of employment may be created and brought to an end in different ways.

Required:
i. Explain contract of employment.
ii. State THREE reasons for which an employer could dismiss an employee.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "BL – Nov 2020 – L1 – SB – Q5b – Employment Law"

  • 5 Marks

BL – Nov 2020 – L1 – SB – Q5a – Alternative Dispute Resolution

Define arbitration and describe an arbitral award.

Arbitration is a type of alternative dispute resolution mechanism.

Required:
Explain arbitration and arbitral award.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "BL – Nov 2020 – L1 – SB – Q5a – Alternative Dispute Resolution"

  • 20 Marks

TAX – Nov 2020 – L1 – SA – Q6 – Tax Administration and Enforcement

: State the contents of a tax return, conditions for TCC issuance, and transactions requiring TCC.

All limited liability companies in Nigeria shall at least once in a year without notice or demand from the Federal Inland Revenue Service (FIRS), file a return with the FIRS in a prescribed form which contains the relevant information and documents.

In Nigeria, a tax clearance certificate (TCC) is issued only upon the application by the taxpayer. Therefore, in issuing the certificate, the relevant tax authority would have satisfied itself that the tax assessed on the income of the applicant for the three years immediately preceding the current year of assessment has been fully paid, or that no tax is due on such income, or that the applicant is not liable to tax for any of the three years.

Required:
a. State FOUR contents of a tax return. (8 Marks)
b. State THREE conditions precedent for the issuance of a TCC. (6 Marks)
c. State SIX transactions for which a TCC is required. (6 Marks)

Total: 20 Marks

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – Nov 2020 – L1 – SA – Q6 – Tax Administration and Enforcement"

  • 12 Marks

TAX – Nov 2020 – L1 – SA – Q5b – Taxation of Specialized Businesses

State six categories of properties exempted from land use charge in Lagos State.

In 2018, the Lagos State Government promulgated the Land Use Charge Law to provide for the consolidation of property and land-based charges and make provisions for the levying and collection of land use charge in the state and for connected purposes.

Section 12 (1) of the Land Use Charge Law, 2018, of Lagos State, provides for the exemption of specified categories of properties from the payment of land use charge.

Required:
State SIX categories of properties exempted from land use charge.
(12 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – Nov 2020 – L1 – SA – Q5b – Taxation of Specialized Businesses"

  • 8 Marks

TAX – Nov 2020 – L1 – SA – Q5a – Taxation of Specialized Businesses

State the benefits of imposing taxes on luxury goods and services.

Luxury tax can simply be defined as tax imposed on goods and services that are considered by the government to be luxury goods and services. Luxury goods and services are those that are not considered to be essential by the government and which are consumed by the rich or wealthy class of the society.

Goods and services that are classified as luxury are usually assessed to tax as a percentage of the sales price but likely at a higher percentage than the regular sales tax or value added tax on essential commodities.

Required:
State FOUR benefits of taxation of luxury goods and services.
(8 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – Nov 2020 – L1 – SA – Q5a – Taxation of Specialized Businesses"

  • 15 Marks

TAX – Nov 2020 – L1 – SA – Q4b – Companies Income Tax (CIT)

Compute tax liabilities for Oxygen Nigeria Limited, considering capital allowances and available options.

(ii) Capital allowances as agreed with the Federal Inland Revenue are as follows:

Year of Assessment Amount (N)
2016 600,000
2017 490,000
2018 420,000
2019 385,000

Required:
Compute the tax liabilities of the company for the relevant years of assessment, taking into consideration the options available to the company.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – Nov 2020 – L1 – SA – Q4b – Companies Income Tax (CIT)"

  • 5 Marks

TAX – Nov 2020 – L1 – SA – Q4a – Companies Income Tax (CIT)

Compute the assessable profit for Oxygen Nigeria Limited for the relevant period based on given profit or loss statements.

Oxygen Nigeria Limited was incorporated on October 2, 2015, but it did not commence business until July 1, 2016. At the meeting of directors held on June 17, 2016, it was decided that the nature of the business of the company should be influenced by the main object clause of the Memorandum of Association of the company, which is, “to carry on business of importers, exporters, distributors, agents, and general contractors”.

Extracts of the company’s statements of profit or loss for the relevant period:

Description Year ended Dec. 31, 2018 (N) Year ended Dec. 31, 2017 (N) 6 months ended Dec. 31, 2016 (N)
Revenue 19,500,000 17,200,000 8,210,000
Direct cost (2,900,000) (2,800,000) (1,200,000)
Gross profit 16,600,000 14,400,000 7,010,000
Other income 36,000 18,000 9,000
Distribution cost (3,710,300) (3,200,000) (1,700,000)
Administrative expenses (7,700,000) (7,400,000) (2,900,500)
Other expenses (1,300,300) (1,201,000) (48,000)
Finance cost (970,000) (890,000) (420,000)
Operating profit 2,955,400 1,727,000 1,950,500

Additional information:

(i) Administrative expenses include:

Expense Description Year ended Dec. 31, 2018 (N) Year ended Dec. 31, 2017 (N) 6 months ended Dec. 31, 2016 (N)
Penalties and fines 700,000 0 0
Allowance for doubtful debts 197,000 400,000 130,000
Depreciation 210,000 250,000 290,000
Preliminary and formation expenses 0 0 200,000
Staff salaries 2,600,000 2,150,000 1,960,000
Office rent 970,000 750,000 750,000
Donation (Boys Brigade) 30,000 0 9,000

Required:
Compute the assessable profit for the relevant assessment year.
(15 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – Nov 2020 – L1 – SA – Q4a – Companies Income Tax (CIT)"

  • 20 Marks

TAX – Nov 2020 – L1 – SA – Q3 – Taxation of Trusts and Estates

State the tax authorities of a trust or settlement and special provisions for unmarried children.

A settlement is a means by which enjoyment of an estate or part of it is transferred to another person, either through a disposition, trust or covenant, agreement, arrangement, or transition of assets by reference to a trust for the benefits of persons specified.

The term “trust” relates to an equitable obligation, binding a person, called the trustee, to deal with a property over which he/she has custody (which is called the trust property), for the benefit of persons (beneficiaries) of which he/she may be one.

Required:
a. State the relevant tax authorities of a trust or settlement and the beneficiaries.
(8 Marks)

b. State the special provisions in respect of settlement on unmarried children.
(12 Marks)

Total: 20 Marks

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – Nov 2020 – L1 – SA – Q3 – Taxation of Trusts and Estates"

  • 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.

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)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – Nov 2020 – L1 – SA – Q2b – Taxation of Trusts and Estates"

  • 11 Marks

TAX – Nov 2020 – L1 – SA – Q2a – Companies Income Tax (CIT)

Compute the income tax liability for three companies based on their total profits and provide reasons.

Alhaji Jimoh Abdulahi retired from public service in 2010 and went into business. His friend advised him to incorporate some companies.

The following information in respect of the companies is provided:

Name of Company Apex Manufacturing Co. Limited Zenith Foods Limited Base Nigeria Limited
Date of Commencement of Business January 2, 2010 January 2, 2017 January 2, 2017
Nature of Business Manufacturing Agriculture Trading
Date of Accounts Year ended December 31, 2018 Year ended December 31, 2018 Year ended December 31, 2018
Revenue (N) 990,400 896,400 900,500
Total Profit (N) 384,000 421,000 396,000

Required:
Compute the income tax liability of each of the companies for the relevant assessment year. Give reasons for your computations.
(11 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – Nov 2020 – L1 – SA – Q2a – Companies Income Tax (CIT)"

  • 8 Marks

TAX – Nov 2020 – L1 – SA – Q1b – Tax Incentives and Reliefs

Explain current year loss relief and carry forward loss relief.

A company that makes a loss from its trade or business is entitled to relieve such loss by carrying it forward for set-off against the assessable profits of subsequent assessment years commencing from the year following that in which the loss occurs.

Required:
Explain current year loss relief and carry forward loss relief.
(8 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – Nov 2020 – L1 – SA – Q1b – Tax Incentives and Reliefs"

  • 12 Marks

TAX – Nov 2020 – L1 – SA – Q1a – Taxation of Partnerships and Sole Proprietorships

Compute the assessable profit or loss for Kayode Oluwa Enterprises for the relevant years.

a. Mr. Kayode Oluwa, a civil engineer, worked for XYZ Nigeria Limited for many years. He retired as the Chief Civil Engineer in 2010. He registered his enterprise under the name of Kayode Oluwa Enterprises and commenced business in 2011.

He appointed you as his tax consultant and submitted his financial records showing the following results:

Year Ended December 31 Amount (N)
2015 1,360,000
2016 (1,900,000)
2017 2,300,000
2018 2,700,000

Required:
Compute the assessable profit/(loss) for the relevant years of assessment. (12 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – Nov 2020 – L1 – SA – Q1a – Taxation of Partnerships and Sole Proprietorships"

Elevate your professional expertise across key business domains with our comprehensive training programs

Our offerings

Contact Info

  • +233203701923
    +233543919232
  • info@nbcinstitute.com

Customer

Get In Touch

Follow us on our social media and get daily updates.

Facebook-f Twitter Linkedin-in Envelope
error: Content is protected !!
Oops!

This feature is only available in selected plans.

Click here to view all plans

Click on the login button below to login if you’re already subscribed to a plan or click on the upgrade button below to upgrade your current plan.

Login
Upgrade Plan

If you’re not subscribed to a plan, click on the button below to choose a plan

Subscribe to a plan