Corporate Accounting: Analysis of National Australia Bank and Commonwealth Bank of Australia

This report provides an analysis of corporate accounting and its different aspects. It includes an analysis of National Australia Bank and Commonwealth Bank of Australia, their equity, cash flows, income statements, and tax expenses.

Corporate Accounting 1
Corporate Accounting

Corporate Accounting 2
Executive summary
It is essential for each association to oversee and keep up the records. The bookkeeping includes
the social occasion of information examination, grouping, confirmation, elucidation of monetary
data. The idea of corporate accounting manages the income proclamations, explanations of
benefit and misfortune accounts, asset report and so on. With the assistance of corporate
bookkeeping, the supervisor of an organization can break down the records of National
Australia Bank and Commonwealth Bank of Australia. It additionally decides the situation of
the obligation value proportion, the situation of liquidity, the aggregate sum of income and costs
that takes the choice in a viable way.

Corporate Accounting 3
Table of Contents
Executive summary.........................................................................................................................2
Introduction......................................................................................................................................4
Owners Equity.................................................................................................................................5
CASH FLOWS STATEMENT.......................................................................................................6
Other Comprehensive Income Statement........................................................................................9
Accounting For Corporate Income Tax.........................................................................................12
Conclusion.....................................................................................................................................17
References......................................................................................................................................18

Corporate Accounting 4
Introduction
This exploration report gives the portrayal of corporate bookkeeping; it additionally depicts the
distinctive parts of bookkeeping. This report is divided into four sections that are proprietor
value in which it portrays the speculations of proprietor short the estimation of liabilities. In this,
it investigates the diverse thing of value and their variety in those things. It additionally assesses
the income articulations and gives the dialog with respect to the exercises. The third parts
examine the components of complete salary articulations that delineate the things which are not
understood in the bookkeeping year. The fourth part is identified with the figuring of corporate
salary impose in which the administrator recognizes the assessment rate with the assistance of
wage charge cost. The two associations chose for this report is Commonwealth Bank of Australia
and National Australia Bank. The National Bank is the biggest monetary establishment in
Australia in connection to showcase capitalization, clients and income. It worked in 1590
branches and plays out their capacities over the world. It serves the results of shopper saving
money, Business keeping money, riches administration protection and so on. The
Commonwealth bank gives the budgetary administrations that comprise the retail business and
institutional managing an account, protection, speculations, and broking administrations.

Corporate Accounting 5
Owners Equity
I) The Equity can be recorded under the monetary record of money related explanations of
associations. It tends to be distinguished that the National Australia Bank and Commonwealth
bank record the specific things under the value that is:
Share capital: It incorporates every one of the assets that can be brought by the association up in
return for shares that can be either normal or favoured stocks (Commonwealth Bank, 2016). On
the off chance that the association needs to raise the value at that point need to get the approval
to issue the extra offers.
Retained Earnings: Retained Earnings are the benefits that can be landed after the time of
representing the offers and profits that can be paid to partners. On the off chance that there are
more income then it tends to be expressed that the association is monetarily steady
(Commonwealth Bank, 2016).
Reserves: These are the benefits that can be held by organization, banks to meet the future
instalments in time of crisis. The stores can be in type of fluid stores that can either with national
bank or with it divisions.
Non-controlling interest: It is the piece of value proprietorship that can't ascribe to the parent
organization that bears over half of intrigue and solidifies the auxiliary outcomes (Kim and Im,
2017).
Contributed Equity: It can likewise be named as the paid-in capital and it is the money and
resources that can be given by partners in return to stock. The sum can be paid for their stake in
firm.

Corporate Accounting 6
From the above depiction, it tends to be assessed that if the association have an alternate
wellspring of value then they have better position and notoriety in the market (Evers, et. al.,
2015).
II) In this inquiry, the supervisor can comprehend the proportion of obligation and value in
connection to association. Value can be characterized as the estimation of advantages less the
estimation of liabilities in regard of benefits. In inverse to value, there is obligation that can be in
type of acquired sum by one gathering to other. It very well may be portrayed as the liabilities
for which association needs to pay.
In connection to the Commonwealth Bank, the measure of $52993 is a piece of the value in the
year 2015, in 2016 it was $60,564 and in 2017 it was $63,716. This circumstance infers that
there is an expansion in the estimation of value which implies the organization has a superior
money related position as they raise the value through numerous sources. On the opposite side,
in the year 2016 the aggregate liabilities is $872,437 and in the year 2017, it was $912,658 which
implies the organization needs to pay obligations as they have taken advances to raise the assets.
The National Australia bank demonstrates the measure of obligation in the year 2015 that is
899,539 and in 2016 it was 726307 and in 2017 it was $737008. It infers that there is change in
the measure of obligation and it is the risk of the bank to pay this sum. The bank has the value of
$51315 in 2016 and in 2017 it was 51317 which mean there is an expansion in the value that
demonstrates the benefit of the bank.
Cash Flows Statement
III) This inquiry comprehends the exercises that are gone along by the association to dissect the
situation of liquidity. With the assistance of income explanations, the organization can without
much of a stretch decide the inflow and outpouring of the money (Dyreng, et. al., 2017). It

Corporate Accounting 7
comprises of the distinctive exercises, for example, working, contributing and financing and that
are talked about underneath:
Operating activities Investing activities Financing activities
In this, the association handles
the assembling and creation
exercises that can emerge from
the purchasing and offering of
items. It comprises of the
money produced from tasks,
premium paid, Interest got, pay
assess paid and so forth.
It decides the total changes in
the situation of money that is
the consequence of the sum
spent on the interests in type of
building, arrive, hardware and
so forth. On the off chance that
the movement portrays the
negative equalization then it
demonstrates that organization
has poor execution. It
comprises of procurement and
offering of advantages, sum got
on various substances, profits
got and so forth.
This action demonstrates the
measure of fund that can be
raised through partners. It
comprises of the issue of
advance capital, continues from
issue of offers, reclamation of
issued obligation securities,
intrigue paid, profits paid to
partners, commitment from
non-controlling interests
(Sheets, 2018).
From the above table, it very well may be gotten to that if there is the associations get money
then it suggests that there is inflow and that speaks to the better position of organization while on
the opposite side if there is outpouring then it delineates the organization is having poor
execution.
IV) The income articulations decide the three exercises through that association can decide the
inflow and outpouring of money. By watching the beneath table, it tends to be understood that
there is variance in the estimation of various exercises and that are talked about underneath:
National Australia Bank:
Particulars 2015 2016 2017 Change
2015-2016
Change
2016-
2017
Change
2015-2017
Cash flow
from
13090 16195 13217 31090 2978 127

Corporate Accounting 8
operating
activity
Cash flow
from
investing
activity
(1830) (9970) (313) 8140 9657 1517
Cash flow
from
financing
activity
1326 7761 (331) 6435 7430 997
Commonwealth Bank
Particulars 2015 2016 2017 Change
2015-2016
Change
2016-2017
Change
2015-2017
Cash flow
from
operating
activity
7183 (4561) (807) (2622) (3754) 6376
Cash flow
from
investing
activity
(1215) (20132) (677) (18917) (19455) 538
Cash flow
from
financing
activity
7875 1620 10,472 6255 8852 2597
V) By analyzing the above table, it tends to be resolved that an association can direct their
business by playing out the three exercises. It can likewise be noticed that there is variety in
these exercises because of their exchange.
In Commonwealth bank there is a diminishing in the working exercises which implies they didn't
collect the assets or cash and there is no such improvement, Apart from this, there is a lessening

Corporate Accounting 9
in the contributing action which implies they put less in debentures and offers. They back more
number of offers in the present year as contrast with existing years.
In National Australia Bank, it very well may be investigations that there is a decline in the
working exercises which suggests that they are not raising the more back and reserves and that
prompts low tasks. It can likewise be noticed that there is a diminishing in the contributing
exercises which implies they didn't put more exercises in the bank.
Other Comprehensive Income Statement
VI) The other comprehensive income statements are the measure of aggregate pay/income that
can be passed by the salary proclamations as they are not understood in the current money
related year. The announcements of thorough salary portray certain things, for example,
reasonable esteem developments on accessible available to be purchased ventures that can be
conveyed in accounting report and if there is any adjustment in the value of investors then that
can be recorded under various heads. Reasonable esteem development of income supports can be
planned to adjust for the progressions in existing resources or obligation. Remote cash
interpretation save net of assessment is the strategy for changing over the money related
explanations of a substance's and that can be accounted for under the present records of the
budgetary year.
VII) The income statement demonstrates the total of consumptions and incomes that happened
inside the associations. Through this, the organization can break down the money related
execution over the particular time of bookkeeping the execution can be gotten to base on
working and non-working exercises. While then again, the complete wage proclamations record
those things which are not understood in the current budgetary year (Edwards, 2017). It
comprises of the things, for example, misfortunes or gains on the income supporting, revaluation

Corporate Accounting 10
of properties net of expense. Conceded assess resources are recorded in resources side on the
estimation of advantages which are recorded under the accounting report.
VIII) Comparison of items of comprehensive income statements
Commonwealth Bank
National Australia Bank :

Corporate Accounting 11
From the above examinations, it tends to be resolved that there is variety in the diverse things of
the exhaustive pay articulations that are separated into two classes that are renamed to
benefit/misfortune account (Commonwealth Bank, 2016). A few things are not ordered into
benefit and misfortune account.
IX) It very well may be assessed that execution of an association can be dictated by the general
execution of money related proclamations. They can't access based on supervisor execution as it
is just a single wellspring of pay that reflects in the announcements. With the assistance of
extensive salary proclamations, the supervisor can decide the benefit and misfortune from the
things that are hidden in the present year. The far reaching pay explanations discard the
adjustments in resources because of progress in possession, value property or different variables.

Corporate Accounting 12
Accounting For Corporate Income Tax
X) Evaluation of tax expenses shown in the latest financial statements of the two companies
Tax Expense is the income before charge that can be duplicated by the proper assessment rate. It
is as per the sound accounting standards (GAAP). It tends to be noticed that salary impose cost
can be paid in future and that can be recorded under the risk side of the accounting report.
By watching the money related explanations of records, it tends to be noticed that
Commonwealth bank has acquired the obligation of (3976) in the year 2017 and in the year 2016
it was ($3071) which demonstrates that organization needs to pay less in the current budgetary
year.
The National Australia Bank, there is a lessening by $73 million or it tends to be expressed that
there is 209% reduction in the benefit before assess. By watching the Income proclamations, it
tends to be inferred that there is a diminishing in the pay impose cost and that implies they need
to cover less regulatory expense to government (National Australia Bank, 2017).
XI) Calculation of the effective tax rate for both companies
The tax is imposed on both the individuals as well as the corporations. The various methods are
used so that that the taxes can be determined and effectiveness of it can be evaluated. The
different types are statutory, marginal and average methods.
Effective tax rate National Australia Bank
Particulars Amount $ Million
Income tax expense 2480
EBT 8661
Effective tax rate 28.63%

Corporate Accounting 13
Effective tax rate for commonwealth bank
Particulars Amount $ Million
Income tax expense 3976
EBT 13944
Effective tax rate 28.5%
Analysis:
It has been analysed from the above analysis that the National Australian Bank has more
effective tax rates than that of the Commonwealth Bank. This effectiveness is evaluated from the
income tax expenses which are levied on the organizations and the earnings before tax is
deducted.
XII) Deferred tax assets/liabilities that are reported in the balance sheet
Deferred tax Deferred tax liabilities
 It is recorded under the head current
resources in asset report.
 It emerges when the benefits as
indicated by charge laws are more
than income according to the book of
records.
 It very well may be computed by
duplicating the assessment rate with
the rate of variety to acquire the
DTA.
 It records the reality of that
organization will make good on
greater government obligation as
they emerge in current period
(Commonwealth Bank, 2016).
 It emerges when impose is not as
much as benefits as indicated by
books of records.
 It is recorded under the obligation
side under monetary record.
In Commonwealth bank has brought about the conceded impose resources of 389 out of 2016
and in 2017 it was 962 that shows there is expanding pattern which suggests that association can
take advantage and from that, they will make good on government obligation in the coming one

Corporate Accounting 14
year from now (Commonwealth Bank, 2016). The Deferred impose obligation is 340 out of 2016
and in 2017 it was 332 that show there is a decline in the liabilities which suggests that the sum
that remaining parts with an organization can be taken sooner rather than later (Drake, et. al.,
2018).
By assessing the monetary explanations of National Australia Bank, it tends to be resolved that
there is an expansion in the conceded charge resources which implies the bank can benefit the
offices of expense in not so distant future. It can likewise be noticed that the bank has brought
about the net conceded impose obligation of $329 that can be set against the expense (Lewellen
& Lewellen, 2016).
XIII) Analysis of increase or decrease in the deferred tax assets or in the deferred tax
liability
By observing the qualities in the above inquiry it very well may be distinguished that there is
increment in the measure of conceded impose resources which infers the better position and that
can be emerge from impermanent contrasts that are considered in the announcements of records
of National Australia Bank (Ball, et. al., 2016).
Aside from that in Commonwealth Bank, there is an expansion in the conceded assesses
resources and a diminishing in the conceded imposes liabilities which imply they are less subject
to pay and there are changes in the duty of government and friends. It very well may be noticed
that both conceded assess resources and conceded impose liabilities can't emerge at same time.
XIV) Calculation of the cash tax amount for both companies using the book tax amount
The cash tax sum can decide the sum that can be paid by the association as it is obligation of
organization to pay the obligations. Conceded impose resources are the advantages or wage for
the organization that can be taken sooner rather than later. In the event that there are no duty

Corporate Accounting 15
resources then it tends to be resolved that organization has settled its record with governments.
The above inquiry gives the points of interest of advantages and liabilities. It very well may be
affirmed that the conceded assess resources and conceded charge liabilities can't emerge at same
time. The DTA emerge when there is distinction between the bookkeeping pay and assessable
salary (Commonwealth Bank, 2016).
XV) Calculate the cash tax rate for both companies
Cash tax rate for National Australia Bank
Particulars Amount ($) million
Cash tax amount 2480
EBT 8661
Cash tax rate 28.63%
Cash tax rate for Commonwealth Bank
Particulars Amount ($) million
Cash tax amount 3976
EBT 13944
Cash tax rate 28.5%
From the above table, it very well may be resolved that the National Australia Bank has the high
rate of expense when contrasted with the ward bank. This can be figured with the assistance of
assessment rate and that can be partitioned by the benefit before impose and increased by 100
(Commonwealth Bank, 2016).

Corporate Accounting 16
XVI) Why is the cash tax rate different from the book tax rate?
Tax Rate Book Rate
It is given in the money related explanations of
records. This sum can be collected on the
aggregate pay of the partnership
(Commonwealth Bank, 2016).
The book rate can be exacted on the book
estimation of benefits and that is given under
the monetary record. The book rate is the rate
that can be settled by the partnership.

Corporate Accounting 17
Conclusion
From the above report, it very well may be gotten to that fund and records assume a fundamental
job in associations. It is mandatory for each association to keep up and record the exchanges in
the books of records. For this, they isolate the corporate bookkeeping into various parts that
assistance to record the record in an appropriate way. With the assistance of far reaching salary,
Statements Company can comprehend the things that are unrealised in the present year. The
monetary record gives the detail of advantages and liabilities that can be set up in the
organization. The income proclamations give the points of interest of various exercises that can
be performed by the association to break down the liquidity position.

Corporate Accounting 18
References
Ball, R., Gerakos, J., Linnainmaa, J.T. and Nikolaev, V., (2016) Accruals, cash flows, and
operating profitability in the cross section of stock returns. Journal of Financial Economics,
121(1), pp.28-45.
Commonwealth Bank (2016). Annual report. [Online]. Available at:
https://www.commbank.com.au/content/dam/commbank/about-us/shareholders/pdfs/
annualreports/2016_Annual_Report_to_Shareholders_15_August_2016.pdf20double
%20page.pdf [Accessed: 25 September 2018]
Drake, K. D., Engel, E., & Martin, M. (2018) Money for Nothing? Using Expectations of Loss
Persistence to Examine CEO Cash Compensation in Loss-Making Firms.
Dyreng, S.D., Hanlon, M., Maydew, E.L. and Thornock, J.R., (2017) Changes in corporate
effective tax rates over the past 25 years. Journal of Financial Economics, 124(3), pp.441-463.
Edwards, A. (2017) The deferred tax asset valuation allowance and firm creditworthiness. The
Journal of the American Taxation Association, 40(1), pp.57-80.
Evers, L., Miller, H. and Spengel, C., (2015) Intellectual property box regimes: effective tax
rates and tax policy considerations. International Tax and Public Finance, 22(3), pp.502-530.
Kim, J. H., & Im, C. C. (2017) The study on the effect and determinants of small-and medium-
sized entities conducting tax avoidance. Journal of Applied Business Research, 33(2), pp.375.
Lewellen, J. and Lewellen, K., (2016) Investment and cash flow: New evidence. Journal of
Financial and Quantitative Analysis, 51(4), pp.1135-1164.

Corporate Accounting 19
National Australia Bank (2017). Annual report. [Online]. Available at:
https://capital.nab.com.au/docs/NAB-2017-annual-financial-report.pdf [Accessed: 25 September
2018]
Sheets, N. C. B. (2018) Non-consolidated Financial Statements. Policy, 2017.