Understanding Accounting for Cash Flow, Other Comprehensive Income Statement, and Corporate Income Tax in AGL Energy

1
HI5020 Corporate Accounting

2
Contents
Introduction......................................................................................................................................3
Section A: Understanding the accounting for cash flow statement in the book of account of AGL
Energy..............................................................................................................................................3
Section A.1: Financial items that are listed in the cash flow statement and discussion on any
change over the past year.............................................................................................................3
Section A: 2: Comparative evaluation of three main activities of cash flow statement over last
three years....................................................................................................................................5
Section B: Understanding the accounting of other comprehensive income statement as performed
by the AGL Energy..........................................................................................................................6
Section B.1: Financial items that are listed in the other comprehensive income statement of
AGL Energy.................................................................................................................................6
Section B.2: Brief discussion of each of financial items that are indicated in the other
comprehensive income statement................................................................................................7
Section B.3: Reasons why the items of the other comprehensive income statement are not
reported in income statement.......................................................................................................8
Section C: Understanding the accounting of corporate income tax as performed by the AGL
Energy..............................................................................................................................................8
Section C.1: Tax expense of the AGL Energy as reported in the latest financial report.............8
Section C.2: Income tax expense as reported in income statement and tax calculated using the
flat tax rate of 30%.......................................................................................................................8
Section C.3: Deferred tax assets and liabilities reported in balance and reason of recording the
same.............................................................................................................................................9
Section C.4: Current tax assets or income tax payable and income tax expenses.....................10
Section C.5: Income tax paid reported in the cash flow statement and income tax expense
reported in the income statement...............................................................................................10
Section C.6: Interesting, confusing, surprising or difficult to understand the treatment of tax. 10
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

3
Introduction
This report is developed solely for the purpose of analyzing and examining the
organizational performance of an ASX listed entity with the help of financial statements. The
financial statements developed by a business entity helps in assessing its financial position by
gaining an examination of the various items reported in these statements. The report has mainly
undertaken an analysis of the financial statement of cash flow and other comprehensive income
statement of AGL Energy Limited; recognized ASX listed energy companies of Australia
involve sin retailing of energy and gas products and services. The major items reported in the
income and cash flow statement is analyzed in the report of the company. Also, the detailed
analysis regarding the accounting for corporate income tax in the financial statements is carried
out in the report.
Section A: Understanding the accounting for cash flow statement in the book of account of
AGL Energy
Section A.1: Financial items that are listed in the cash flow statement and discussion on any
change over the past year
Important cash flow items that are presented in cash flow statement
AGL Energy
Data for last two years
Amount in $ million
Financial Items 2017 2016 Change
Amount in %
Cash flow activities that has been
carried out in operating activity
Cash collected from the Debtors
$
13,552.00
$
11,903.00
$
1,649.00 13.85%
Cash payments made to employees
and company's supplier
$
(12,216.00)
$
(10,397.00)
$
(1,819.00) 17.50%
Cash payments for cost of finance
$
(188.00)
$
(186.00)
$
(2.00) 1.08%
Cash used to pay the income tax
$
(292.00)
$
(166.00)
$
(126.00) 75.90%

4
Cash flow activities that has been
carried out in Investing activity
Cash used to pay the amount for
property, plant and equipment
$
(498.00)
$
(533.00)
$
35.00 -6.57%
Payments for making investments in
joint venture and associates
$
(13.00)
$
(30.00)
$
17.00 -56.67%
Cash received on sale of Fixed assets
$
278.00
$
8.00
$
270.00 3375.00%
Cash received on sale of subsidiaries
and other businesses
$
-
$
673.00
$
(673.00) -100.00%
Cash flow activities that has been
carried out in Financing activity
Cash payments used to buy back the
equity shares
$
(473.00)
$
-
$
(473.00)
Cash collected through loans taken
from banks
$
1,472.00
$
550.00
$
922.00 167.64%
Cash payments for repayment of
borrowings
$
(1,146.00)
$
(1,371.00)
$
225.00 -16.41%
Cash utilization of paying dividends
$
(517.00)
$
(446.00)
$
(71.00) 15.92%
(Annual report. 2017: AGL Energy and Annual report. 2016: AGL Energy)
Items shown under operating activity: Operating activity provides list of cash flows that
generated or used while performing the operations. Company mainly receives the cash from the
customers and pays maximum part of it to their employees and suppliers. It has been seen that
cash flow receipts from customers has been increased by 13.85% while there was increase of
17.50% in cash used for payment to suppliers and employees. In current year AGL Energy has
paid $292 of income tax which was increased by 75.90% as compared previous year.
Items shown in investing activity: Investing activity consists of cash flow used or recovered on
purchase or sale of fixed assets. Cash is used to buy the plant, property and equipment and also