QUEENS’ COLLEGE DISTANCE EDUCATION DIVISION
TEL. 011-8-12-19-82
ASSIGNMENT
ON
Public Finance & Taxation
Date: - _____________
Total Weight: - 30 %
Name: - ____________________________ ID NO: - ______________
Department: -_______________ Study center: -_____________ Entry year: - ___________
Program: DEGREE
This is the only assignment of this course.
This assignment is to be completed and submitted to the office of your center. Do not
attempt the assignment until you are certain that you have understood the units it covers and
have revised your self-test exercises and learning activities, and other necessary references.
If you have any question about the units and activities, state the item/s clearly on a
separate sheet of paper and attach to your assignment paper.
1. Discuss briefly the canon of taxation which is stated by Adam smith.
2. What are the objective of taxation which. Please Discus briefly.
3. What is direct tax? List some of them.
4. What is Direct tax? List some of them?
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5. The following transactions are given for the tax year Hamle 1 , 1998 to Sene 30 , 1999 for
Amantha General Trading Pvt. Ltd. Co.:
A. Sales during the tax year is Br 2,320,000
B. The inventory account shows a balance of Br 520,000 (26,000 units @ Br.20 a unit) at the
beginning of tax year and the enterprise purchased Br 1,080,000.00 (50,000 units @ Br.21.60 a
unit) and Br 464,000.00 (20,000 units at Br.23.20 a unit) during Hidar and Yekatit 1998,
respectively. The enterprise uses periodic inventory system and 26,600 units are remaining on
hand as of Sene 30, 1999
C. Promotional expense of Br 83,000 was incurred which comprises Br 38,000 advertising
expense; Br 25,000 trading coupons and Br 20,000 entertainment expense.
D. Salary expense of Br 165,000 was incurred and composed of Br 100,000 basic salary; Br
25,000 provident fund contribution; Br 20,000 representation expense and Br 20,000 overtime
payment
E. Store Rent Expense of Br 240,000 was also incurred
F. Br 21,000 interest is paid on Br 100,000 principal amount of loan where the interest rate
between NBE and Commercial Banks is 9%
G. Penalties paid by the business is Br 1,360
H. Building has a cost of Br 500,000 and not fully depreciated during tax year 1999
st
I. Truck has a carrying amount of Br 120,000 on Hamle 1 , 1998.
J. Computers, Information System, Data Storage and Software have a balance of Br 69,000 on
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Hamle 1 , 1998. During tax year the business enterprise acquired and disposed Br 32,000 and
39,000 assets, respectively
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K. Br 80,000 award for outstanding performance was received from the government
L. the business incurred Br 100,000 expenses on behalf of the owners
M. Donation of Br 50,000 was made by the business to charity organization with successful
achievement and transparent system.
N. Withholding income tax receivable has a balance of Br 23,800 at the end of tax year 1998
O. Br 50,000.00 loss was carried forward to tax year 1999
Required:
A. Prepare profit and loss statement for tax purposes assuming that the enterprise is a body and
use accrual basis of accounting for tax purpose for tax year ending Sene 30, 1998 as per
Proclamation No. 286/2002 and Regulation No. 78/2002
B. Prepare profit and loss statement for financial year ending Sene 30, 1998 for financial
accounting purposes assuming that the same cost and depreciation method as “A” above
C. Determine the non-deductible items and the related amounts
6. Ato Nahome Hunduma rented his Land Cruiser Toyota at Br 15,000 for three months to SS
Tour and Travel Pvt. Ltd. Co. Required: Determine the income tax to be withheld by the Payer
SS Tour and Travel Pvt. Ltd. Co. and record the tax related transactions
7. Ato XX deposited Birr 200,000 at prevailing Deposit rate (4%) at Commercial Bank of Ethiopia
at the beginning of the tax year 1997. If the deposit is in the account for two years, determine
the tax amount to be withheld by Commercial Bank of Ethiopia and record the withdrawal of
the sum after two years at the end tax year June 1998.
8. SI Business Enterprise sold its building which has a cost of Br 85,000 at Br 185,000. The
Building was held for 10 years and Br 11,000 Land and Building tax was paid on the building
during the 10 years period. If the average inflation rate is 5%, determine the Taxable Capital
Gain and the Capital Gain Tax.
9. Ato Jara sold his personal home at Birr 150,000 in 1996 E.C. The home was accomplished
with the cost of Birr 95,000 in 1993 E.C. Determine the Capital Gain Tax assuming that the
person paid Br 2,200.00 Land and Building Tax and the applicable Prince Index is 1.25 in this
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regard.
10. Ato Abebe Purchased 100 Shares from NIB International Bank S. Co. at Birr 1100 per share
when the par value is Birr 1000 per share on January 1, 2003. Ato Abebe sold the shares at Birr
1700 per share on February 20, 2005. Taking year 2003 as a base year, the price index is 1.15
in 2005. Determine the tax on the Capital Gain
