a) Kaka Ltd is a mining company that has been operating in Ghana for some time now. The following relates to Kaka Ltds 2019 year of assessment:

GH

Revenue 10,200,000

Cost 4,000,000

Profit 6,200,000

The following additional information is relevant and has been adjusted in arriving at the profit stated above:

GH

i) Depreciation, Depletion and Amortization 2,000,000

ii) Cost incurred in overburden stripping and shaft sinking during production to improve access amounted to GH800,000.

iii) Contribution towards worthwhile cause is GH10,000. This was in support of a hole-in heart child. This was duly acknowledged by Ghana Health Service.

iv) Royalty of GH80,000 was paid without recourse to the revenue from production.

Additional information:

An asset (Capital Asset) acquired in 2016 for GH1,000,000 was sold for GH200,000 in 2019.

Capital allowance (written down value brought forward) on the assets as at 31 December 2018 was GH4,000,000

10 fresh graduates were recruited in 2019 year of assessment, 4 of the fresh graduates completed universities in the United States of America while the others completed University for Development Studies in Ghana. They were paid GH120,000 as salaries. Total workforce for 2019 year of assessment was 60.

Required:

i) Compute the tax payable by Kaka Ltd. (10 marks)

ii) The mining company indicated that it had an idle cash of GH100,000. If it adds it to its working capital, an additional income of GH10,000 would accrue but with an option to purchase Treasury Bills, the interest would remain at GH10,000.

Required:

Advise Management on the tax implication of the proposed investment. (2 marks)