Hanover Upstream Limited started producing oil in the Oleum field in the year 2020. Forty thousand barrels (40,000) were remaining after giving out Government's shares with a market price of $50 per barrel. Production cost and marketing cost incurred are $200,000 and $50,000 respectively.

The additional information below relates to the preamble.

i. Included in the cost is a depreciation of $10,000 and a research and development cost of $5,000.

The research and development cost were wholly, exclusive and necessarily incurred in the acquisition of an asset.

ii. The company invested in a financial instrument and thus made a financial gain of $2,500 and incurred a financial loss of $3,500.

iii. The company was charged an amount of $10,000 for gross misconduct by a court of law.

iv. Bonus payment of $5,000 was made in respect of exploring the Oleum field.

v. Before the production year 2020, exploration and development cost incurred was $150,000 and asset cost of $50,000. In 2020 , an asset of $1,000 was sold.

REQUIRED:

(a) Compute the corporate tax payable by Hanover Upstream Ltd for the year of assessment 2020

(b) Comment on all tax treatments applicable to the question above

(c) State and briefly explain the characteristics and relevance of the petroleum industry.

(d) The petroleum industry is made up of three sectors activities. Give an overview of each of them with relevant examples and five functions of each of their regulatory authorities.

Answer rating: 100% (QA)

i Characteristics of the petroleum industry It is also known as the oil industry It includes the glo... View the full answer