Theory question 103
Public Sector AccountingThe political structure of country 'X' comprises five states A, B, C, D and E and the Federal Government. The following information relate to the revenue for the fiscal year ended 31st December 1986.
Receipts from mineral resources: ₦7,250,000
Receipts from agriculture: ₦669,000
Import duties: ₦1,275,000
Excise duties: ₦500,000
Personal and Company Income Tax: ₦2,652,000
Other Incomes: ₦3,654,000
You are also given the following information: (a) Revenue is shared as follows: 40% to the Federal Government, 10% to each of the states on equal basis, 5% of the total revenue to the Federal Government Consolidated Fund. (b) The population of each state is as follows: A. 500,000 B. 450,000 C. 400,000 D. 350,000 E. 300,000. You are required to compute the: (i) Total revenue for the country (ii) Revenue for the Federal Government. (iii) Revenue for the states collectively and individually.
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(i) Total revenue = 7,250,000 + 669,000 + 1,275,000 + 500,000 + 2,652,000 + 3,654,000 = ₦16,000,000
Sharing: Federal 40%, Consolidated Fund 5%, states equally 5 × 10% = 50%; remaining 5% shared among states by population
(ii) Federal Government: 40% × 16,000,000 = 6,400,000 + Consolidated Fund 5% = 800,000; total ₦7,200,000
(iii) States collectively: equal share 8,000,000 + population share 800,000 = ₦8,800,000
Individually (equal 1,600,000 each + population share of 800,000 over total population 2,000,000): A 1,600,000 + 200,000 = 1,800,000; B 1,600,000 + 180,000 = 1,780,000; C 1,600,000 + 160,000 = 1,760,000; D 1,600,000 + 140,000 = 1,740,000; E 1,600,000 + 120,000 = 1,720,000
The 5% left after 40% + 5% + 50% is the part shared by population (₦0.40 per head).