OT05970 - PRT: terminal liftings - disposal of field interests - examples
Example 1:
Big Fish Plc is selling its interest in Flippers field to Small Fry Ltd (unconnected). »Ê¹ÚÌåÓýapp completion date is 30 June. Flippers is part of Pisces blend.
Big Fish has two other field interests in Pisces:
Fin - June Production entitlement 100,000
Scales - June Production entitlement 300,000
Flippers production entitlement for June is 200,000
At 30 June Flippers� stock position is as follows:
Operational closing stock 40,000
Tax closing stock 100,000
Difference (Tax Closing stock LESS operational Closing stock) = 60,000
Reallocation:
Fin: 60,000 x 100,000 / 400,000 = 15,000
Scales: 60,000 x 300,000 / 400,000 = 45,000
Tax allocated liftings in June:
Fin 50,000
Scales 150,000
Flippers 100,000
Total 300,000
Tax closing stock before adjustment:
Fin 50,000
Scales 150,000
Flippers 100,000
Total 300,000
Tax closing stock after adjustment:
Fin 65,000 (i.e. 50,000 + 15,000)
Scales 195,000 (i.e. 150,000 + 45,000)
Flippers 40,000 (I.e. same as operational closing stock)
Total 300,000
Example 2:
Bigger Fish Plc is selling its interest in Fluke field to Smaller Fry Ltd (unconnected). »Ê¹ÚÌåÓýapp Completion date is 30 June. Fluke is part of Pisces blend. Bigger Fish has two other field interests in Pisces:
Fin - June production entitlement 100,000
Scales - June production entitlement 300,000
Fluke production entitlement for June is 200,000
At 30 June Fluke’s stock position is as follows:
Operational closing stock 100,000
Tax closing stock 40,000
Difference (Tax Closing stock LESS operational Closing stock) = -60,000
Reallocation:
Fin: 60,000 x 100,000\400,000 = 15,000
Scales: 60,000 x 300,000\400,000 = 45,000
Tax allocated liftings in June:
Fin 50,000
Scales 150,000
Fluke 100,000
Total 300,000
Tax closing stock before adjustment:
Fin 50,000
Scales 150,000
Fluke 40,000
Total 240,000
Tax closing stock after adjustment:
Fin 35,000 (i.e. 50,000 - 15,000)
Scales 105,000 (i.e. 150,000 - 45,000)
Fluke 100,000 (I.e. same as operational closing stock)
Total 240,000
Summary of examples
| Tax Closing stock Less operational Closing stock | Departing Field | Remaining field(s) |
|---|---|---|
| Result is POSITIVE | Reduce tax stock by deducting the positive figure | Increase tax stock by adding the positive figure |
| Result is NEGATIVE | Increase stock by deducting the negative figure | Reduce tax stock by adding the negative figure |