Corporate Accounting: Analysis of Myer Holdings and Kathmandu Holdings Limited

The report aims at understand each one of the line items contains in the statement of equity, the statement of cash flows and the statement of comprehensive income. It further talks about the deferred taxes, effective tax rates, the cash tax rates, the difference between the 2.

CORPORATE ACCOUNTING 1
CORPORATE
ACCOUNTING

CORPORATE ACCOUNTING 2
Executive summary:
The companies undertaken for review are Myer holdings and the Kathmandu holdings
Limited. Both of these companies are departmental stores. They deal in the women’s wear,
men’s wear etc. The report aims at understand each one of the line items contains in the
statement of equity, the statement of cash flows and the statement of comprehensive income.
It further talks about the deferred taxes, effective tax rates, the cash tax rates, the difference
between the 2.

CORPORATE ACCOUNTING 3
Contents
Introduction:........................................................................................................................................4
Owners’ equity:...................................................................................................................................4
Part i:................................................................................................................................................4
Part ii:...............................................................................................................................................7
Part iii:..............................................................................................................................................8
Part IV:...........................................................................................................................................20
Part v:.............................................................................................................................................21
Part vi:............................................................................................................................................22
Part vii:...........................................................................................................................................24
Part viii:..........................................................................................................................................25
Part ix:............................................................................................................................................25
Part x:.............................................................................................................................................26
Part xi:............................................................................................................................................26
Part xii:...........................................................................................................................................27
Part xiii:..........................................................................................................................................27
Part xiv:..........................................................................................................................................27
Part xv:...........................................................................................................................................28
Part xvi:..........................................................................................................................................29
References:.....................................................................................................................................31

CORPORATE ACCOUNTING 4
Introduction:
The first company chosen is Myer holdings which is the company based in the country of
Australia. It is a departmental store. The company has a number of store networks which
includes in the footprint of about 60 stores in the various different retail locations all across
the country. The company has products which includes women wear, men’s wear, miss shop
etc. the company has its own women’s wear brand, saas and bide. The company also has the
top brands such as TOPSHOP, Seed etc. the subsidiaries of the company includes Myer Pty
Ltd, NB Elizabeth Pty Ltd, NB Russell Pty Ltd, Warehouse Solutions Pty Ltd, Myer Group
Finance Limited, Myer Group Pty Ltd and Myer Travel Pty Ltd. There are many more
activities that are undertaken by the departments store retail business as well and this is done
through its subsidiaries (Reuters, 2018).
The second company undertaken for review include Kathmandu Holdings Limited which is
the company that has some transnational chain of the retail stores. The company deals in the
travel and adventure apparel. The company is also one of the leading retailers of clothing and
equipment for the purposes of travelling and also for adventure in the countries of New
Zealand, Australia and the UK. The company has about 163 stores all around the globe
(Kathmandu Holdings, 2018).
Owners’ equity:
Part i:
The following are the desired statements:
Myer Holdings:
Owner's equity:
(Amounts in $ in

CORPORATE ACCOUNTING 5
thousands)
Items Figures in the year
2017
Figures in
the year
2017
Understan
ding
Change Chan
ge in
%
Contributed
equity
7,39,329.00 7,39,33
8.00
Money
invested
into the
company
could be
due to sale
of shares
of the
company
0.00
%
Reserves -8,607.00 -
11,056.00
Amounts
set aside
by the
company
to meet the
future
contingenc
ies
could be
due to
addition of
previous
years
profit
-
22.15
%
Retained
earnings
3,42,146.00 3,79,48
3.00
Sum total
of all of the
amounts
set aside in
all the
previous
year
could be
due to
previous
years
profits/(los
ses) being
transferre
-
9.84
%

CORPORATE ACCOUNTING 6
d in this
account
Total 10,72,868.00 11,07,76
5.00
Kathmandu Holdings:
Particulars 2017 2016 Understandi
ng
Change Chang
e in %
(Amounts in NZ $ in
thousands)
Contributed
equity
2,0
0,209.00
2,0
0,191.00
Money
invested into
the company
could be due to
no change in
the new
capital/investm
ent by the
shareholders
0.01%
Retained
earnings
1,4
9,893.00
1,3
6,033.00
Amounts set
aside by the
company to
meet the
future
contingencie
s
could be due to
previous years
profits/(losses)
being
transferred in
this account
10.19
%

CORPORATE ACCOUNTING 7
Reserves -
23,002.00
-
24,541.00
Sum total of
all of the
amounts set
aside in all
the previous
year
could be due to
addition of
previous year’s
profit/(losses)
-
6.27%
Total 3,2
7,100.00
3,1
1,683.00
Part ii:
Myer Kathmandu
Particulars 2017 2017
Contributed equity
7,39,329.0
0
2,00,209.0
0
Reserves -8607
-

CORPORATE ACCOUNTING 8
23,002.00
Retained earnings
3,42,146.0
0
1,49,893.0
0
- -
Total
10,72,868.0
0
3,27,100.0
0
Part iii:
Myer Holdings:
Statement of cash flows
(Amounts in $
in thousands)
Particulars 2017 2016 Understanding Change in %
Cash flows from
operating
activities:
Receipts from
customers
29,31,853.00 31,
01,149.
amounts
received from
-5.46%

CORPORATE ACCOUNTING 9
(inclusive of
goods and
services tax)
00 the accounts
receivables on
account of
sales made
Payments to
suppliers and
employees
(inclusive of
goods and
services tax)
-27,44,651.00 -
29,15,4
67.00
amounts paid
in to the
suppliers
towards the
raw material
purchased
-5.86%
Other income -
71.00
amounts
received by the
company from
other
investments
Interest paid -10,165.00 -
15,894.
00
amounts paid
by the
company on
borrowings
made from
outside
Tax paid -27,759.00 -
20,369.
00
amounts paid
by the
company
towards taxes

CORPORATE ACCOUNTING 10
on the revenue
earned
Net cash
provided by
operating
activities
1,49,278.00 1,
49,490.
00
Cash flows from
investing
activities:
Payments for
property, plant
and equipment
-88,452.00 -
40,479.
00
amounts paid
by the
company
towards the
payments for
the property,
plant and
equipment
purchased
118.51%
Payments for
intangible assets
-24,217.00 -
11,891.
00
amounts paid
by the
company
towards the
103.66%

CORPORATE ACCOUNTING 11
purchase of
intangibles
Payment for
acquisition of
assets, under
business
combination
-13,000.00
-
amounts paid
by the
company
towards the
assets acquired
due to the
business
combination
Lease incentives
and
contributions
received
16,758.00
1,856.0
0
amounts paid
on account of
the lease
incentives and
the
contributions
received by the
company
Net investment
in associate
-966.00 -
8,680.0
0
amounts paid
by the
company for
making and
invetsment in
associate
-88.87%
Interest received 421.00 amounts

CORPORATE ACCOUNTING 12
943.00 received by the
company
towards the
interest
Net cash used in
investing
activities
-1,09,456.00 -
58,251.
00
Cash flows from
financing
activities
Repayment of
borrowings, net
of transaction
costs
-5,000.00 -
2,95,00
0.00
amounts paid
by the
company
towads
repaying in the
borrowings
-98.31%
Dividends paid
to equity holders
of the parent
-49,276.00 -
16,426.
00
amounts paid
by the
company as
dividend to the
shareholders
199.99%
Payment for -196.00 payments #DIV/0!

CORPORATE ACCOUNTING 13
acquisition of
treasury shares
- made by the
company for
acquiring the
treasury shares
Proceeds from
the issue of
shares, net of
transaction costs
- 2,
12,011.
00
amounts
received from
the issue of
shares
-100.00%
Other 34.00
60.00
amounst
received from
sale of other
financing
activities
-43.33%
Net cash used in
financing
activities
-54,438.00 -
99,355.
00
Total of
operating,
financing and
investing
activities
-14,616.00 -
8,116.0
0
Net cash from
aggregate of
the activties in
the year
Opening cash
balance
45,207.00
53,323.
Cash in the
start

CORPORATE ACCOUNTING 14
00
Cash and cash
equivalents at
end of period
30,591.00
45,207.
00
Net cash at the
end of the year
Kathmandu Holdings:
Particulars 2017 2016 Understandin
g
Change Change
in %
(Amounts in NZ $ in
thousands)
Cash flows
from
operating
activities
Receipts
from
customers
4,44,100.0
0
4,24,182.0
0
these are the
amounts
received by
the company
from the sales
made during
the year
could be due
to lesser
revenue
from
product
agreements
4.70%
Interest
received
28.0
0
26.0
0
amounts
received by
the company
could be due
to more
investment
7.69%

CORPORATE ACCOUNTING 15
on the
investments
made outside
made by the
company
Income tax
received
- 1,357.0
0
Refund of the
excess income
taxes paid
during the
year
could be due
to more
income
earned
during the
year
-
100.00
%
Payments
to
suppliers
and
employees
-
3,60,122.00
-
3,36,968.00
these are the
amounts paid
to the
suppliers for
the purchase
of the raw
material
could be due
to increase
in the raw
material
purchased
Income tax
paid
-14571 -16688 Amounts paid
to the income
tax authorities
on the income
earned during
the year
could be due
to decrease
in the
revenue
before taxes
Interest
paid
-2162 -2829 these are the
amounts paid
by the
could be due
to
repayment

CORPORATE ACCOUNTING 16
company
towards the
interest on
borrowed
capital
of the loans
or the
borrowings
Net cash
flows used
in
operating
activities
67,273.0
0
69,080.0
0
Cash flows
from
investing
activities
Proceeds
from sale
of
property,
plant and
equipment
1.0
0
5.0
0
Sale of fixed
assets
could be due
to sale of
property
-80.00%
Purchase - - Purchase of could be due

CORPORATE ACCOUNTING 17
of
property,
plant and
equipment
11,419.00 20,729.00 fixed assets
for the
company
to purchase
of property
Purchase
of
intangibles
-
1,857.00
-
2,467.00
amounts paid
by the
company
towards the
purchase of
intangibles
could be due
to more
purchase of
intangibles
Net cash
flows used
in
investing
activities
-
13,275.00
-
23,191.00
Cash flows
from
financing
activities
Proceeds
of loan
advances
90,330.0
0
63,047.0
0
amounts
received by
the company
towards the
could be due
to receipt of
more
borrowings
43.27%

CORPORATE ACCOUNTING 18
loans
advanced
by the
company
Proceeds
from share
issues
- - amounts
received from
issue of shares
could be due
to no issue
of shares
during the
year
Dividends
paid
-
24,179.00
-
16,119.00
amounts paid
on investment
made by the
shareholders
could be due
to dividends
paid on the
investments
made in by
the
shareholder
s
Repaymen
t of loan
advances
-
1,23,533.00
-
87,658.00
amounts paid
towards the
loans
borrowed
could be due
to
repayment
of loans
Net cash
flows used
in
financing
-
57,382.00
-
40,730.00

CORPORATE ACCOUNTING 19
activities
Total of
operating,
financing
and
investing
activities
-
3,384.00
5,159.0
0
Total of
operating,
financing and
Opening
cash
balance
6,921.0
0
1,732.0
0
Cash in the
start
Cash and
cash
equivalent
s at end of
period
3,537.0
0
6,891.0
0
Net cash at the
end of the
year
Part IV:
The following is the desired comparative statement:
Myer Kathmandu
Particul
ars
2017 2016 2015 2017 2016 2015
Net 1,49,27 1,49,49 96,91 67,2 69,08 29,62

CORPORATE ACCOUNTING 20
cash
from
operati
ng
activitie
s
8.00 0.00 5.00 73.00 0.00 7.00
Net
cash
from
financin
g
activitie
s
-54438 -
99,355.00
-
95,232.00
-
57,382.00
-
40,730.00
-
14,898.00
Net
cash
from
investin
g
activitie
s
-
1,09,456.0
0
-
58,251.00
-
1,04,250.0
0
-
13,275.00
-
23,191.00
-
19,980.00
Total -
14,616.00
-
8,116.00
-
1,02,567.0
-
3,384.00
5,15
9.00
-
5,251.00

CORPORATE ACCOUNTING 21
0
Part v:
In respect of Myer Holdings, the company has faced some severe cash shortage which would
have made it difficult to cater to the short term liabilities for it.
In respect of Kathmandu Holdings, the company has faced some severe cash shortage which
would have made it difficult to cater to the short term liabilities for it.
In the nutshell, the following would be stated:
 In year 2017, none were better than another
 In year 2016, none were better than another
 In year 2015, none were better than another
Part vi:
Myer Holdings:
Statement of comprehensive income
(Amounts in $ in
thousands)
Particulars 2017 2016
Profit for the period 11,939.00
60,543.
00

CORPORATE ACCOUNTING 22
Other comprehensive income
Cash flow hedges 547.00
-
14,486.00
Exchange differences on translation of
foreign operations 329.00
-
221.00
Other comprehensive income for
the period, net of tax 876.00
-
14,707.00
Total comprehensive income for the
period attributable to owners of
Myer Holdings Limited 12,815.00
45,836.
00
Kathmandu Holdings:
Statement of comprehensive income
(Amounts in NZ $ in

CORPORATE ACCOUNTING 23
thousands)
Particulars 2017 2016
Profit after income tax 38,039.00
33,521.
00
Other comprehensive
income that may be
recycled through profit
and loss:
Movement in cash flow
hedge reserve 209.00
-
15,891.00
Movement in foreign
currency translation
reserve 209.00
-
6,384.00
Other comprehensive
income/(expense) for
the year, net of tax 418.00
-
22,275.00
Total comprehensive
38,457.00
11,246.

CORPORATE ACCOUNTING 24
income for the year
attributable to
shareholders 00
(Reuters, 2018)
Part vii:
There are many of the revenues, expense, gains and the losses that are not realised and
hence, these are reported in the statement of comprehensive income. There is something
which has been realised when there is an underlying transaction which has been
completed such as the investment which has been sold. In order to illustrate, in case the
company has made an investment in bonds, then if the fair value of these bonds changes,
then this would be an unrealised loss or a unrealised gain for the company. As and when
these bonds are sold, the company could go on to include the loss or gain on such bonds.
It is also acceptable for the company to report in the components of the other
comprehensive income which is net of taxes or even before the related tax effects with a
single expense of income taxes.
This statement of comprehensive income helps the user of the financial statements to
know the financial status of the company but it gives too much complexity to the
statement of income (Bragg, 2018).
Part viii:
The following is the desired statement:

CORPORATE ACCOUNTING 25
Myer Kathmandu
Particulars 2017 2017
Comprehensive income
12,815.0
0
38,457.0
0
Part ix:
There are many of the revenues, expense, gains and the losses that are not realised and
hence, these are reported in the statement of comprehensive income. There is something
which has been realised when there is an underlying transaction which has been
completed such as the investment which has been sold. In order to illustrate, in case the
company has made an investment in bonds, then if the fair value of these bonds changes,
then this would be an unrealised loss or a unrealised gain for the company. As and when
these bonds are sold, the company could go on to include the loss or gain on such bonds.
It is also acceptable for the company to report in the components of the other
comprehensive income which is net of taxes or even before the related tax effects with a
single expense of income taxes.
This statement of comprehensive income helps the user of the financial statements to
know the financial status of the company but it gives too much complexity to the
statement of income. Hence, since these are not realised profit or loss for the company,
therefore, these should not be included in evaluating the performance of the company.
Part x:
The following table shows in the desired amounts:

CORPORATE ACCOUNTING 26
Myer Kathmandu
Particulars 2017 2017
Income taxes
18,274.0
0
16,935.0
0
Part xi:
The following is the desired table:
Effective tax rate
Myer Kathmandu
Particulars 2017 2017
Effective tax rate: 60% 31%
Income taxes
18,274.0
0
16,935.0
0
Earnings before taxes
30,213.0
0
54,974.0
0

CORPORATE ACCOUNTING 27
Part xii:
A deferred tax assets is the asset of the company that has the ability of reducing in the income
of the company. This could also mean the case wherein the business has gone to over pau the
taxes or have paid the taxes in advance on the date of the balance sheet. These are the
amounts of the taxes that are ultimately returned in to the company in the form of tax relief or
as an over payment and hence, these are termed as the deferred tax assets for the company
(Taxmann, 2018).
Part xiii:
There was an increase in the amounts of the deferred tax assets for both the companies.
Part xiv:
The following is the desired computation:
Particulars Myer Kathmandu
Net income
11,939.0
0
38,039.0
0
Less: deferred tax assets
1,265.0
0
733.0
0
Income on which taxes
would have been paid
10,674.0
0
37,306.0
0

CORPORATE ACCOUNTING 28
Part xv:
Both of these companies have a loss and so, the cash effective tax rate would not be possible.
Particulars Myer Kathmandu
Income tax
provision - -
Increase in deferred
tax assets
1,265.0
0
733.0
0
Current income
taxes
1,265.0
0
733.0
0
Other income
1,76,485.0
0 -
Taxes paid on other
income
1,05,891.0
0 -
Unlevered cash
taxes
-
1,04,626.00
733.0
0
EBITA
41,036.0
0
57,004.0
0
Cash tax rate -254.96% 1.29%

CORPORATE ACCOUNTING 29
Part xvi:
The effective rate of tax is the rate at which the company would pay in the government and it
is somewhat charged at the same rate. It is the rat at which the business or the individual shall
be charged on the earned income. This is calculated using the tax amount that has been paid
and is divided by the taxable income.
Whereas, the cash tax rate is the rate at which the company actually pays in the taxes. The
company though could have a certain amount of money which could be payable by it, but it
ends up paying more or less than that amount due to the presence of deferred tax assets or the
deferred tax liabilities (Bayt, 2018).
Conclusion:
In the nutshell, from the above, it could be stated that the cash crunch is being faced by both
of the company and this is evident from the negative amounts of the cash flows in each of the
3 years. Further, Myer Holdings limited has more amount of shareholders equity invested in
it. Which means that the company has more equity and less debt invested in itself. There are
few of the reasons for the fact that the items are not included in the statement of profit or loss
and the same have been stated therein this report. Due to the reason that these are the amounts
of the gains or the loss that are still unrealised, hence, these are not included in the statement
of profit or loss. In terms of the balance in the statement of comprehensive income,
Kathmandu Holdings has more amount when compared amongst these 2 companies. In the
terms of effective tax rate, Myer Holdings has more tax rate. This means that the company is
paying more tax when compared with Kathmandu Holdings Limited. The main aim of
including the deferred taxes is the fact these serve as the assets or the liabilities for the
company in the balance sheet.

CORPORATE ACCOUNTING 30
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Bayt.com. (2018). What is the difference between effective tax rate and statutory tax rate? -
Bayt.com Specialties. [online] Available at:
https://www.bayt.com/en/specialties/q/76082/what-is-the-difference-between-effective-tax-
rate-and-statutory-tax-rate/ [Accessed 18 Sep. 2018].
Bragg, S. and Bragg, S. (2018). Other comprehensive income. [online] AccountingTools.
Available at: https://www.accountingtools.com/articles/what-is-other-comprehensive-
income.html [Accessed 18 Sep. 2018].
Editorial, R. (2018). ${Instrument_CompanyName} ${Instrument_Ric} Company Profile |
Reuters.com. [online] U.S. Available at: https://www.reuters.com/finance/stocks/company-
profile/MYR.AX [Accessed 18 Sep. 2018].
https://www.taxmann.com. (2018). Difference between Deferred Tax Asset (DTA) and
Deferred Tax Liability (DTL). [online] Available at:
https://www.taxmann.com/blogpost/2000000449/difference-between-deferred-tax-asset-dta-
and-deferred-tax-liability-dtl.aspx [Accessed 18 Sep. 2018].
Kathmandu Investor Centre. (2018). Home. [online] Available at:
https://www.kathmanduholdings.com/ [Accessed 18 Sep. 2018].
www.kathmanduholdings.com. (2018). Annual report 2015. [online] Available at:
https://www.kathmanduholdings.com/wp-content/uploads/2012/08/Kathmandu-AR-2015-
web-ready.pdf [Accessed 18 Sep. 2018].
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https://www.kathmanduholdings.com/wp-content/uploads/2012/08/Kathmandu-Annual-
Report-2017_online.pdf [Accessed 18 Sep. 2018].

CORPORATE ACCOUNTING 31
www.myerholdings.com. (2018). annual report 2015. [online] Available at:
http://investor.myer.com.au/FormBuilder/_Resource/_module/dGngnzELxUikQxL5gb1cgA/
file/Myer_Annual_Report_2017.pdf [Accessed 18 Sep. 2018].
www.myerholdings.com. (2018). Annual report 2017. [online] Available at:
http://investor.myer.com.au/FormBuilder/_Resource/_module/dGngnzELxUikQxL5gb1cgA/
file/Myer_Annual_Report-2015.pdf [Accessed 18 Sep. 2018].