Ican 2025 Taxation Question 3

ABC Nigeria Limited is a company engaged in the importation of ladies’ wigs and hair attachments. As a result of difficulties in procuring foreign currency needed for importations, the Board of Directors of the company decided to cease operations on April 30, 2024. The following adjusted profits were extracted from the company’s records: N’000 Year ended December 31, 2022 16,800 Year ended December 31, 2023 30,000 Year ended April 30, 2024 9,800. After the date of cessation, the following transactions took place: (i) A trade creditor with outstanding balance of N4,125,000 was paid N2,970,000 in full and final settlement of debts. (ii) A trade receivable amounting to N2,750,000 that was written off as bad debt was duly recovered. (iii) The delivery van used to distribute the company’s products to customers across the country which was snatched at gunpoint along Iperu-Sagamu Expressway was recovered by the Nigeria Police Force and the van was sold for N9,650,000. (iv) The company’s lawyer who helped in the recovery of the delivery van and bad debt was paid a commission of N2.5 million.