May 2018 Q5 a.

The following data is relevant to the upstream petroleum operations of Lanandam Ltd for 2017 year of assessment.
i) 200,000 barrels of oil sold internationally at $68 per barrel
ii) An asset bought at the inception of petroleum operations was sold for $1,000,000 in 2017 year of assessment
iii) 50,000 barrels lifted and sold to its Parent company in the United States at an agreed price of $56/barrel. The price ruling on the international market on the day of lifting the oil for the Parent Company was $60/barrel.

Required:
Compute the revenue from the above and comment on the treatment of the sale of the petroleum assets as indicated above. (5 marks)