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The shareholders of Japan Rocks, a computer chip manufacturing company based in Japan, are planning on acquiring 60% of the shares in Konadu Yiadom Ltd in Ghana. The return on income for Konadu Yiadom Ltd for the year ended 31 December 2020 showed a loss of GH¢3,600,000 and the financial cost of GH¢900,000.
Required:
Advise Japan Rocks and its shareholders on the income tax implications of the acquisition of shares by Japan Rocks and the treatment of financial cost.
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Tanko Ltd has been involved in tree cropping for some time now. Over the last four years, the business has boomed, and its fruits are sold before they are even harvested. Tanko Ltd intends to transfer the entity to Agoo Ltd as a going concern.
Required:
Explain the tax implication of the transfer of Tanko Ltd to Agoo Ltd.
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There has been a merger among three companies: Ann Ltd, Bab Ltd, and Cee Ltd. The merger was geared towards creating a monopoly in the market. After careful revaluation of the assets and liabilities of the companies, the following is the outlook:
The following is the outlook of the new company after the merger:
Required:
As an intern of IKERN and Associates, write a memo to your partner on the company’s tax exposure after the merger.
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Farmer Ltd is a non-resident company based in the USA. Farmer Ltd has succeeded over the years in acquiring and selling companies in distress alongside its primary objectives of buying and selling cosmetics. In the 2020 year of assessment, it decided to announce its presence in Ghana by acquiring Bugum Ltd, a resident company. Bugum Ltd has had financial setbacks in its fortunes over the last couple of years and became vulnerable to predators.
Required:
Advise the management of Farmer Ltd, what the tax implications are if Farmer Ltd acquires more than 50% of the underlying ownership of Bugum Ltd.
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Exclusif Homes Ghana Ltd is a wholly owned Ghanaian real estate company. The basis period of the company ends on 31 December each year. The company has obtained a government contract to build low-cost houses across the country. In order to raise additional capital to undertake this project, the company is looking for an investor who would acquire at least 51% of the shares of the company. The managers of the company are engaged in negotiations with several potential investors, and there is the likelihood of having an investor and agreements signed on 31 January 2022.
The financial statements of Exclusif Homes Ghana Ltd revealed that the company made a loss of GH¢2,500,000 for the period ended 31 December 2021. Included in the expenses of the company are financial costs and bad debt amounting to GH¢100,000 and GH¢150,000 respectively.
The company also has a parcel of land located at Abokobi which the company purchased three years ago at the cost of GH¢100,000. The current value of the land is GH¢500,000.
Required:
Advise Exclusif Homes Ghana Ltd on the following:
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Cradle Ltd, a company based in the United Kingdom, has proposed to acquire interest in Mamen Ltd, a company incorporated in Ghana and engaged in the sale of ceramics in Ghana. As part of Cradle Ltd’s investigation to acquire Mamen Ltd, the following financial indicators caught the attention of the management of Cradle Ltd:
Required:
Evaluate the tax impact of the above financial indicators on the operations of Cradle Ltd and advise the management of Cradle Ltd on how to reduce its tax exposure if any.
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The following has been extracted from the tax records of Mbangba Ltd relating to the 2018 year of assessment, which it intends to benefit in terms of tax outcome from the 2019 year of assessment.
| Item | Amount (GH¢) |
|---|---|
| Tax loss recorded for the first time in 2018 Y/A | 400,000 |
| Financial Cost carried forward from derivatives- 2018 | 100,000 |
| Bad Debts from Customers crystallized but not utilized in 2018 | 1,200,000 |
Lawomba Ltd in March 2019, acquired 68% equity shares of Mbangba Ltd and rebranded the name as Lawomba Ltd and conveyed the circumstance after the deal was clinched to the Ghana Revenue Authority to amend its records accordingly and recognize them as the legitimate persons in control of Mbangba Ltd.
The management of Lawomba Ltd has written to you making available the above disclosures for your tax opinion.
Required:
What is the tax implication of the above transactions in the records of Lawomba Ltd?
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
The shareholders of Japan Rocks, a computer chip manufacturing company based in Japan, are planning on acquiring 60% of the shares in Konadu Yiadom Ltd in Ghana. The return on income for Konadu Yiadom Ltd for the year ended 31 December 2020 showed a loss of GH¢3,600,000 and the financial cost of GH¢900,000.
Required:
Advise Japan Rocks and its shareholders on the income tax implications of the acquisition of shares by Japan Rocks and the treatment of financial cost.
Find Related Questions by Tags, levels, etc.
Tanko Ltd has been involved in tree cropping for some time now. Over the last four years, the business has boomed, and its fruits are sold before they are even harvested. Tanko Ltd intends to transfer the entity to Agoo Ltd as a going concern.
Required:
Explain the tax implication of the transfer of Tanko Ltd to Agoo Ltd.
Find Related Questions by Tags, levels, etc.
There has been a merger among three companies: Ann Ltd, Bab Ltd, and Cee Ltd. The merger was geared towards creating a monopoly in the market. After careful revaluation of the assets and liabilities of the companies, the following is the outlook:
The following is the outlook of the new company after the merger:
Required:
As an intern of IKERN and Associates, write a memo to your partner on the company’s tax exposure after the merger.
Find Related Questions by Tags, levels, etc.
Farmer Ltd is a non-resident company based in the USA. Farmer Ltd has succeeded over the years in acquiring and selling companies in distress alongside its primary objectives of buying and selling cosmetics. In the 2020 year of assessment, it decided to announce its presence in Ghana by acquiring Bugum Ltd, a resident company. Bugum Ltd has had financial setbacks in its fortunes over the last couple of years and became vulnerable to predators.
Required:
Advise the management of Farmer Ltd, what the tax implications are if Farmer Ltd acquires more than 50% of the underlying ownership of Bugum Ltd.
Find Related Questions by Tags, levels, etc.
Exclusif Homes Ghana Ltd is a wholly owned Ghanaian real estate company. The basis period of the company ends on 31 December each year. The company has obtained a government contract to build low-cost houses across the country. In order to raise additional capital to undertake this project, the company is looking for an investor who would acquire at least 51% of the shares of the company. The managers of the company are engaged in negotiations with several potential investors, and there is the likelihood of having an investor and agreements signed on 31 January 2022.
The financial statements of Exclusif Homes Ghana Ltd revealed that the company made a loss of GH¢2,500,000 for the period ended 31 December 2021. Included in the expenses of the company are financial costs and bad debt amounting to GH¢100,000 and GH¢150,000 respectively.
The company also has a parcel of land located at Abokobi which the company purchased three years ago at the cost of GH¢100,000. The current value of the land is GH¢500,000.
Required:
Advise Exclusif Homes Ghana Ltd on the following:
Find Related Questions by Tags, levels, etc.
Cradle Ltd, a company based in the United Kingdom, has proposed to acquire interest in Mamen Ltd, a company incorporated in Ghana and engaged in the sale of ceramics in Ghana. As part of Cradle Ltd’s investigation to acquire Mamen Ltd, the following financial indicators caught the attention of the management of Cradle Ltd:
Required:
Evaluate the tax impact of the above financial indicators on the operations of Cradle Ltd and advise the management of Cradle Ltd on how to reduce its tax exposure if any.
Find Related Questions by Tags, levels, etc.
The following has been extracted from the tax records of Mbangba Ltd relating to the 2018 year of assessment, which it intends to benefit in terms of tax outcome from the 2019 year of assessment.
| Item | Amount (GH¢) |
|---|---|
| Tax loss recorded for the first time in 2018 Y/A | 400,000 |
| Financial Cost carried forward from derivatives- 2018 | 100,000 |
| Bad Debts from Customers crystallized but not utilized in 2018 | 1,200,000 |
Lawomba Ltd in March 2019, acquired 68% equity shares of Mbangba Ltd and rebranded the name as Lawomba Ltd and conveyed the circumstance after the deal was clinched to the Ghana Revenue Authority to amend its records accordingly and recognize them as the legitimate persons in control of Mbangba Ltd.
The management of Lawomba Ltd has written to you making available the above disclosures for your tax opinion.
Required:
What is the tax implication of the above transactions in the records of Lawomba Ltd?
Find Related Questions by Tags, levels, etc.
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