Corporate Accounting: Analysis of ASX listed companies

This assignment has been prepared to make a brief analysis of two ASX listed companies belongs to the same industry. The selected companies are Perpetual Resources Ltd and Hill End Gold Ltd. In this report, we will discuss the cash flow statement, owner’s equity, effective tax rate etc. On the basis of the annual report of the selected companies, we have analyzed the transaction reported by the company.

CORPORATE ACCOUNTING 1
CORPORATE ACCOUNTING

CORPORATE ACCOUNTING 2
Contents
Executive summary:............................................................................................................................3
Introduction:........................................................................................................................................3
Owners’ equity:...................................................................................................................................3
Part I:...............................................................................................................................................3
Part ii:...............................................................................................................................................6
Cash flow statement:...........................................................................................................................6
Part iii:..............................................................................................................................................6
Part IV:...........................................................................................................................................13
Part v:.............................................................................................................................................14
Other comprehensive income statement:.........................................................................................14
Part VI:...........................................................................................................................................14
Part vii:...........................................................................................................................................15
Part viii:..........................................................................................................................................15
Part ix:............................................................................................................................................15
Accounting for corporate income tax:.............................................................................................15
Part x:.............................................................................................................................................15
Part xi:............................................................................................................................................15
Part xii:...........................................................................................................................................16
Part xiii:..........................................................................................................................................16
Part xiv:..........................................................................................................................................16
Part xv:...........................................................................................................................................17
Part xvi:..........................................................................................................................................18
References:.....................................................................................................................................19

CORPORATE ACCOUNTING 3
Executive summary:
This assignment has been prepared to make a brief analysis of two ASX listed companies
belongs to the same industry. The selected companies are Perpetual Resources Ltd and Hill
End Gold Ltd. In this report, we will discuss the cash flow statement, owner’s equity,
effective tax rate etc. On the basis of the annual report of the selected companies, we have
analyzed the transaction reported by the company.

CORPORATE ACCOUNTING 4
Introduction:
In the present era there is huge improvement in the reporting of the financial transaction of
the company. The users of the financial statement through reading and analysing of the
financial statement can obtain the insight of the business. In the report we will analyse the
reporting of the shareholder equity of the Perpetual Resource limited and Hill End Gold Ltd
and changes in the item over the past. It also analysis changes in the debt position of the
company in the recent past. Further the report discusses the items of the cash flow and the
way liquidity position of the company can be identified through analysing each item of the
equity. The report also states the reporting of the other comprehensive statement of both the
company and the reason why the items are not reported as regular operation. The reporting of
the taxation of the both the company can also be understood in the report.
Perpetual Resources Ltd
Perpetual Resources Limited was founded in the year 2011 with headquarter situated at
NSW, Australia. The company as nagged in the business of exploration of the gold project.
The main purpose or focus of the company is to implement the exploration and development
of a program for A to Z project.
Hill End Gold Ltd
The company has been founded in the year 1996 with headquartered situated at Sydney,
Australia. Hill End Gold Ltd is also spread geographically with their subsidiaries such as
Pure Alumina Pty Ltd, Hegel Investments Pty Ltd. The company has mainly been engaged in
the exploration of gold across Australia (Hillendgold.com.au. 2018).
Owners’ equity:
Part I:
As required, the following table briefly interprets the Owner’s Equity of the selected
companies:
Perpetual Resources Ltd
Owner's equity:
(Amounts in $000 )
Particulars 2017 2016 Understanding Change Ch
ang

CORPORATE ACCOUNTING 5
e in
%
Contributed
Equity
248712 247718 contributed equity
means the amount of
invested by the
shareholders of the
company in
exchange for shares
the slight increase in
contributed earning is
due to issue of shares
by the company in the
year ended 2017
0.4
0%
Retained
Earnings
6541 -1635 It depicts the amount
of Money retained
with a purpose to
meet future
contingencies. This
amount arises as a
result of the transfer
of a portion of profit/
loss earned during
the year
such a huge change is
due to the profit earned
during the year BT
Perpetual Resources,
however, there was a
loss in the previous
year that led
accumulated loss for
the periods
-
500
%
reserves 22707 9676 As the name
suggests, it is a
reserve kept aside by
every corporations
per the law.
Reserves have a direct
connection with profit/
loss earned during the
year. Hence increase in
reserve is mainly due
to the conversion of
loss to the company
into profit for the
period ended 2017
135
%
Total 277960 255759
(Annual Report, 2017).

CORPORATE ACCOUNTING 6
Hill End Gold Ltd:
Owner's equity:
(Amounts in $ )
Particulars 2017 2016 Understanding Change Change
in %
Contributed
Equity
76530051 74908934 contributed equity
means the amount
of investment by
the shareholders of
the company in
exchange for
shares
the increase in contributed
equity shares shows the
additional issue of shares
during the year by
Perpetual resources
limited
2.16%
Reserves 212121 135539 As the name
suggests, it is a
reserve kept aside
by every
corporations per
the law.
The increase shows the
transfer of profit during
the year to the reserve
account. It directly means
the profit has been
increased over the year
56.50%
Accumulated
Loss
-59322550 -58102463 As the name
predicts, it means
the loss
accumulated over
the years. It is due
to a deficit of the
company
it depicts that accumulated
loss is greater than the
accumulated profit that
resultant led to negative
balance & the same has
been increasing due to an
increase in a loss during
the year 2017
2.10%

CORPORATE ACCOUNTING 7
Total 17419622 16942010
(Annual Report, 2017).
Part ii:
As required, the following table interprets the comparative analysis of equity & debt of the
selected companies:
Perpetual
Resources Ltd
Hill End Gold
Ltd
Particulars 2017 2017
(Amounts in
$000 ) Amounts in $000 )
Contributed Equity 2,48,712 76,530
Retained Earnings/
Accumulated loss
6,541 -59,323
Reserves 22,707 212
Total 2,77,960.00 17,419.62
(Annual Report, 2017).
Cash flow statement:
Part iii:

CORPORATE ACCOUNTING 8
As required, below table explains each item of cash flow statement along with their
understanding and reason for changes for the selected companies:
Perpetual Resources Ltd
Cash flow statement:
(Amounts in $000)
Particulars 2017 2016 Understanding Reason for
Change
Change
in %
Cash flows
from operating
activities:
Distributions/
dividend
received
6,547 9,043 It refers to the amount
of money received as
dividend/ distribution
during the year 2017 by
the company on the
investments.
here, the decrease
is mainly due to the
announcement of a
dividend made by
the investee
company
-27.60%
Interest received 911 565 it depicts the amount of
money received an
interest income against
the investments
it is mainly due to
increase in
investment made
during the year
2017
61.24%
other income 216 258 it refers to other
income such
commission etc from
the increase/
decrease depends on
the activities
performed
-16.28%

CORPORATE ACCOUNTING 9
the customers
Payment of
management fee
-3,011 -2,836 it refers to the amount
expended during the
year against
management fee
due to inflation 6.17%
paid income tax -3,251 -669 it is the liability of
every corporation
payable to the
government in respect
of the income earned
during the year
since the company
has significantly
earned a profit
during the year
ended 2017,
consequently the
income tax payable
has been increased
386%
Other expense
paid
-1,617 -1,341 it refers to other
expenditure incurred to
run the operating
activities such as
salaries, bills etc
the increase/
decrease depends
upon activities
reformed during the
year
20.58%
Net cash
provided by
operating
activities
-205 5,020
Cash flows
from investing
activities:
Proceeds due to
sale of
investment
2,71,650 3,23,038 it means the amount
received as a result do a
sale of investment by
the company during the
eyar2017
It is due to the
market value of an
investment which
has been sold during
the year by the
-15.91%

CORPORATE ACCOUNTING 10
company.
purchases of
various
investments
-2,58,761 -2,88,113 As clearly depicts, it
refers to the amount
paid for the purchase of
an investment that
increases the interest
income of the company
it is due to the
decision of the
management of the
company in regard
to investments
-10.19%
Net cash used
in investing
activities
12,889 34,925 -63.10%
Cash flows
from financing
activities
payment of
dividend
-9,613 -3,050 It means the amount of
money paid by the
company to their
shareholders as a
dividend during the
year ended 2017.
There is such a
high increase. This
is s because the
company has earned
a profit during the
year 2017 which
was a loss in the
year ended 2016
215%
proceeds from
the exercise of
options
- 1,348 it refers to the amount
received on exercising
options purchased
previously
All options are set
off in the years 2016
-100%
Net cash used
in financing
activities
-9,613 -1,702

CORPORATE ACCOUNTING 11
The net increase
in cash and cash
equivalents
3,071 38,243 Aggregated cash for
the year from activities
Cash and cash
equivalents at
the start of the
period
58,350 20,107 cash at the beginning
of the year
Cash and cash
equivalents at
end of the
period
61,421 58,350 Net cash at the end of
the year
(Annual Report, 2017).
Hill End Gold Ltd:
Cash flow statement:
(Amounts in $ )
Particulars 2017 2016 Understanding Reason for
Change
Change
in %
Cash flows from
operating activities
Interest Received 5313 6277 it depicts the
amount of
money received
an interest
income against
the investments
the decrease
is due to the
sale of
investment
by the
company
-15.36%
Other income received 0 9367 it means the there is no -

CORPORATE ACCOUNTING 12
amount of
money received
as a result of
other income
such as
commission etc
from the
customers
other income
earned by the
company for
the year
ended 2017
100.00%
Payment to supplier &
employees
-970948 -
990322
the amount of
money paid o
vendors etc for
running the
operating
activities of
every company
Changes
directly
depend upon
the type &
nature of
services
taken
-1.96%
Net cash flows used
in operating activities
-965635 -
974678
Cash flows from
investing activities
Proceeds from the sale
of shares
0 657442 it refers to the
money received
as a sale of
shares during
the year
no such sale
transaction
has taken
place for the
year ended
2017
-
100.00%
Payment for
exploration bonds
0 41519 it is a type of
investments
made by the
company for
exploration
bond
no such
investment
made in the
eyras ended
207 by the
company
-
100.00%
proceeds from the 0 60600 it refers to the no such sale -

CORPORATE ACCOUNTING 13
disposal of fixed assets money received
as a sale of
noncurrent
assets during
the year
transactions
took place for
the year
ended 2017
100.00%
Mining property -23246 -48007 it depicts the
amount
invested in
regard to the
mining property
-51.58%
Payment for
exploration
expenditure
-57171 -
225487
it depicts the
amount spent in
regard to
exploration
the increase/
declares have
a direct link
with
purchases
made during
the year
-74.65%
Net cash flows used
in investing activities
-80417 486067 #REF!
Cash flows from
financing activities
Proceeds due to the
issue of shares
164963
0
460220 it means the
issue of shares
to the
shareholder
during the year
it depends
upon the
number of
shares &
market price
of shares
issued by the
company for
the
accounting
period
258.44%

CORPORATE ACCOUNTING 14
Net cash flows used
in financing activities
164963
0
460220
Net decrease/ increase
in cash and cash
equivalents
603578 -28391 Aggregated
cash for the
year from
activities
Cash and cash
equivalents at the start
of the period
27996 56387 cash at the
beginning of
the year
Cash and cash
equivalents at end of
the period
631574 27996 Net cash at the
end of the year
Part IV:
Comparative Analysis of the selected companies (Perpetual Resources limited and Hill end
Gold Limited) based on cash flow statement is as follows:
Perpetual Resources Ltd Hill End Gold Ltd
Particulars 2017 2016 2015 2017 2016 2015
(Amounts in $000 ) Amounts in $ )
Net cash from
operating activities -205 5020 326 -966 -975 -164
Net cash from
Investing activities 12889 34925 -224403 -80 486 -108
Net cash from
financing activities -9613 -1702 244184 1650 460 275
Total 3071 38243 20107 604 -28 2

CORPORATE ACCOUNTING 15
Part v:
By comparing the cash flow statement of both the companies it can be concluded that the
financial position of perpetual resources limited is strong than Hill end gold limited. It also
depicts that the demand of product & services of perpetual resources is higher. And investors
believe to invest comparatively in his company.
Another comprehensive income statement:
Part VI:
Other comprehensive income i.e. OCI of selected companies (Perpetual resources limits and
Hill end Gold Limited) are as follows:
Perpetual Resources Limited- As per the annual report of the company for the year ended
in 2017; there is no OCI i.e. other comprehensive income presented in the income statement
of the company.
Hill End Gold Ltd- income statement of the company present “Gain on revaluation of
available for sale financial assets “as OCI i.e. other comprehensive income for the year ended
2017.
Part vii:
In accordance with the prescribed law or as per GAAP, there are some income, revenue,
expenses, gain that are excluded to be shown in the income statement are known as other
comprehensive income. The reason for the same has been that items are not actually realized
during the year. For example sale of assets is the realization of assets during the year however
revaluation of assets cannot be said to be the realization of assets hence gain/ loss on the
realization of assets will be taken as other comprehensive income. As stated above gain on
revaluation in case of Hill end gold limited is OCI i.e. other comprehensive income since the
assets has not sold during the year but only revalue’s as per the market value (Bragg, S. and
Bragg, S. (2018). Also as per matching concept all the expenses should be charged against
the profit of the same period in order to report the profitability of the company in adequate
way. There are certain business transaction the benefit of which would arise in the near future
thus form the part of other comprehensive income instead of regular business income.

CORPORATE ACCOUNTING 16
Part viii:
Comparative Analysis cannot be made for the selected companies since there is no OCI i.e.
other comprehensive income presented in the income statement of perpetual resources limited
(Annual Report, 2017). If these items would have reported in income statement it would have
maximized the current year return of the shareholder and leads to inappropriate reporting of
the financial statement.
Part ix:
No. The other comprehensive income does not plan any role to determine the performance of
the manger of the company (Bragg, S. and Bragg, S. (2018). These income should not be part
of the regular income as the transaction does not relates to the regular operation of the
business.
Accounting for corporate income tax:
Part x:
The income tax expenses for the period can be taken from income statement where it is
reported as income tax paid. The tax expense of the selected companies as per the annual
report for the year ended 2017 is as follows:
Perpetual resources limited- For the year ended 2017; tax expense of Perpetual Resources
Limited is of $11648000.
Hill End Gold Ltd- there is nil tax payable by the company Hill end Gold limited due to a
loss for the year ended 2017.
Part xi:
Calculation of effective tax rate for the selected companies (Perpetual Resources Limited and
Hill end Gold Limited) is as follows:
Effective tax rate
Perpetual
Resources
Ltd
Hill End
Gold Ltd
Particulars 2017 2017
(Amounts in
$000)
Amounts in
$)

CORPORATE ACCOUNTING 17
Effective tax rate: 27% 0
Income taxes 11648 0
Earnings before
taxes 43462 -1220087
In nutshell on the basis of above able, it has been depicted that Perpetual resource-limited has
a highest effective tax rate. It is mainly due to nil tax liability for the Hill end Gold Limited
(Perpetualequity.com.au. (2018).
Part xii:
The timing difference during the accounting year led to provide deferred tax assets or
deferred tax liability for any company. DTA is a reduction in future tax payable of the
company or vice versa for DTL (Taxman, 2018). The other reason for reporting of deferred
tax assets and liabilities is due to difference in the regulation of calculating profit for income
tax purpose and business purpose.
Part xiii:
In respect of both the companies i.e. Perpetual Resources Ltd and Hill End Gold Ltd, there is
an increase in deferred tax assets over the year.
Part xiv:
Cash tax amount for the selected companies (Perpetual Resources Limited and Hill end Gold
Limited) has been calculated as follows:
Particulars
Perpetual
Resources Ltd
Hill End Gold
Ltd
Net income
47,823.0
0
-
1,383.44
Add: deferred tax assets
2,569.0
0
892.4
8
Income on which taxes
would have been paid
45,254.0
0
-
2,275.92

CORPORATE ACCOUNTING 18
Part xv:
The brief calculation of the cash tax rate of (Perpetual Resources Limited and Hill end Gold
Limited) is as follows:
Particulars
Perpetual
Resources Ltd
Hill End Gold
Ltd
Income tax
provision - -
Increase in deferred
tax assets
3,979.0
0
31.7
6
Current income
taxes
11,648.0
0 -
Other income - -
Taxes paid on other
income - -
Unlevered cash
taxes
11,648.0
0 -
EBITA
47,823.0
0
-
1,383.44
Cash tax rate 24.36% 0.00%
Due to nil tax liability for Hill end gold limited, the cash tax rate of Perpetual Resources
Limited is higher comparatively
Part xvi:
The reason for the difference in the cash tax and book tax is difference of timing and
regulation of income tax law and corporate tax law. In accounting terms, it has been if there
seems to have two ways of measuring the income tax expense that incurs for the company
during the year based on the income:
 Cash tax payable by the company
 Book-tax expense

CORPORATE ACCOUNTING 19
 Hence, it can be depicted that both the terms are different and a company always pays
less than the due amount during the year.

CORPORATE ACCOUNTING 20
Conclusion
Taking under consideration the various calculation based on the annual report of the selected
companies (Perpetual Resources Ltd and Hill End Gold Ltd), it can be concluded that The
cash flow statement of both the companies have been showing good sign in respect of the
cash terms i.e. cash inflow & outflow is attractive and have been maintained adequately for
the financial position of the companies. By comparing the cash flow statement of both the
companies it can be concluded that the financial position of perpetual resources limited is
strong than Hill end gold limited. It also depicts that the demand of product & services of
perpetual resources is higher. The report also has provided us understanding of the reason of
the change in the item reported as the shareholder equity by the company. Also we have got
an understanding of the debt position of the above two company through the report.

CORPORATE ACCOUNTING 21
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CORPORATE ACCOUNTING 22
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2018].
Perpetualequity.com.au. (2018). perpetual Resources Limited- Annual Report, 2017. [online]
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