pathfinder - The Institute of Chartered Accountants of Nigeria

PATHFINDERQUESTION 2(a)ZEEM LIMITEDCOMPUTATION OF ASSESSABLE PROFITS ON COMMENCEMENT OF BUSINESSWithout Tax Payers‟ ElectionWith Tax Payers‟ ElectionAssessmentAssessableAssessableYears Basis Period Profit Basis Period ProfitNN2003 1/6/03-31/12/03 21,000 1/6/03-31/12/03 21,0002004 1/6/03-31/5/04 51,000 1/1/04-31/12/04 72,000(N21,000+ 5/12X 72,000)2005 1/1/04 -31/12/04 72,000 1/1/05-31/12/05 54,000123,000 126,0002006 1/1/05-31/12/05 54,000 1/1/05-31/12/05 54,0002007 1/1/06-31/12/06 28,800 1/1/06-31/12/06 28,800Recommendation: The tax payer should not exercise his right of election to beassessed on actual basis for the 2 nd and 3 rd years of assessment, because it willproduce a higher tax liability.(b)ABDULAHI NIGERIA LIMITEDCOMPUTATION OF ASSESSABLE PROFITS FOR THE RELEVANT YEARS (Based onOld Accounting Period)Year of Basis Period Assessable ProfitAssessmentN2001 1/7/1999-30/6/2000 240,0002002 1/7/2000-30/6/2001(N180,000+N140,000) 320,0002003 1/7/2001-30/6/2002(N140,000+N160,000) 300,000860,000INTERMEDIATE EXAMINATION - NOVEMBER 201071