THE WREN TEST
These article is derived from the accounting profession, it is very useful and applicable to life.
When filing tax returns, most client are often perplexed on why the profit declared in their company's profit or loss statement is different from the actual profit which the tax authority will use to assess their tax. Here's the simple reason
In Nigeria, any expense incurred in generating the profits of a company must satisfy all four major conditions stated in the tax law. The test used to assess compliance to these conditions is referred to as the WREN TEST
In essence the expense must be Wholly, Reasonably, Exclusively and Necessarily(WREN) incurred for the purpose of generating profit for the business. The details of these conditions are specified below:
Wholly: The entire expense amount must be incurred in generating the profits of the company.
Reasonably: The expense must be reasonable in relation to the profit or loss for the period.
Exclusively: The business alone must have obtained the benefit of incurring that expense.
Necessarily: The expense should be such that the company's business profit cannot be derived without incurring that expense.
Using this test, all expenses recorded in Profit or loss statement that do not fit into all the conditions will be ignored by the tax authority. The implication of this is that the company will end up paying a higher amount of tax.
Just like many tax client, we wonder why we don't achieve our goals in life or why we end up broke. The simple reason is because we have failed or ignored the WREN life's test. The WREN TEST is indeed a great principle for living. Like author and leadership expert Mute Efe will put it, "principle don't care". It doesn't care if you are a good person or not, principles will only work for those that applies them.
Now scroll back up and replace where you see profit with your goals and replace expense with money, time, association, etc. Let's do the analysis
Wholly: Your entire time/money must be spent in achieving your goal and success in life.
Reasonably: The resources(time, money, knowledge) you have must be reasonable in relation to the goal you want to achieve. For example you set a target to become a millionaire by 25 and at 24 you are still earning 15k per month with little or no savings/investment. This kind of goal leads to desperation and frustration.
Exclusively: acquire only skills that will be useful in achieving your. don't be a jack of all trade, master of none. This also apply to the kind of association you join or make. It is men of one thing that makes great impact.
Necessarily: Your time and money must be channeled towards gathering every knowledge and data that are key to achieving your goal/vision.
Before you buy that dress, join that association or FB group, engage in that long conversation, buy that novel/book, take that class, attend that event, etc ask yourself is wholly, reasonably, exclusively, necessary for my success in life, is it WREN?!
When you fail the WREN TEST two things are likely going to happen
> your don't achieve your set goals
> you spend More resource (money, time, etc) than you ought to have spent
.I hope this article achievea it aim by making you conscious of your goals and how to achieve them easily.
© M. ADEYEMI
∆ Writer
∆ Teacher
∆ Tax Consultant
Member Creative Writing SAED, NYSC, Kwara state.
Very inspiring ��
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