QUESTION

New Moon Petroleum Exploration Limited is an oil producing company in Nigeria. An extract
of its results for the year ended 31 December 2008 is as follows:
. N’000
Sales of Kerosine 2, 400,000
Sales of Diesel 2,575,000
Sales of Petrol 3,500, 000
Refinery Costs 750,000
Sales of Crude Oil 16,950,000
Incidental Income 513,450
Exploration Cost 1,960,000
Management and Administration Cost 986,500
Non Productive Rent 200,000
Capital Allowances 550,392
Royalties 250,000
Custom Duties 400,000
Petroleum Investment Allowance 450,392
Transportation costs of refined products 750,000

Management and Administration expenses, capital allowances, and incidental income are
apportioned between the Upstream and Downstream Operations in the ratio of 2:1 respectively.