Corporate Accounting Analysis at Iress Limited

HI5020 Corporate Accounting
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Table of Contents
Introduction:...............................................................................................................................3
1. From your firm’s financial statement, list each item of equity and write your
understanding of each item. Discuss any changes in each item of equity for your firm over
the past year articulating the reasons for the change..............................................................4
2. What is your firm’s tax expense in its latest financial statements?....................................6
3. Is this figure the same as the company tax rate times your firm’s accounting income?
Explain why this is, or is not, the case for your firm.............................................................7
4. Comment on deferred tax assets/liabilities that are reported on the balance sheet
articulating the possible reasons why they have been recorded.............................................8
5. Is there any current tax assets or income tax payable recorded by your company? Why is
the income tax payable not the same as income tax expense?.............................................10
6. Is the income tax expense shown in the income statement same as the income tax paid
shown in the cash flow statement? If not why is the difference?.........................................11
7. What do you find interesting, confusing, surprising or difficult to understand about the
treatment of tax in your firm’s financial statements? What new insights, if any, have you
gained about how companies account for income tax as a result of examining your firm’s
tax expense in its accounts?.................................................................................................12
Conclusion:..............................................................................................................................13
References................................................................................................................................14
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Introduction:
This report is prepared to discuss the concepts related to the corporate accounting that are
applicable to the businesses. The concepts are discussed taking into consideration the Iress
Limited. IRESS is a software business initiated in Australia and is specialised in the
development and the administration of the software systems and the services related to the
wealth management and the financial market. The services are provided by the business to its
financial institutions, stock brokers and the research analysts. The equity and the expenses
related to the taxations are arranged effectively. The various tax expenditure treatments are
provided in this report along with the concepts of the deferred liabilities and the taxes. The
effective analysis and the understanding are provided in this report to enhance the level of
understanding. The financial statements are evaluated and analysed effectively in this report.
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Question 1.
It is observed from the annual report prepared at the end of the year 2016 that the share of the
equity which is proportioned by the company includes the items such as issued capital,
reserves and retained earnings. The share proportioned by the issued capital is $375287000
while the share proportioned by the reserves is $6403000 and the retained earning involved
the proportion of $19136000. Hence from the consolidation of all the items under the equity
the total share available for the equity is 400,826,000 (Iress, 2016).
The brief discussions of the items of the equity are provided thereunder:
Issued capital:
Issued capital means the sum of the nominal price of the shares which are detained by the
stockholders. The shares which have been traded to the shareholders against cash or some
other consideration are considered to be a part of the issued share capital. If the new shares
are issued to the shareholders then this leads to increase in the share of issued capital while if
the shares are redeemed or repurchase then the share capital is reduced.
Reserves:
The term is not defined by the principles laid for the accounting. But in general terms, the
profit which is appropriated by the business for the specific purposes is termed as reserves in
the accounting terms. This helps in the business to use the funds for purposes such as
payment of the dividend or related to the buyback of shares.
Retained Earnings:
Retained earnings mean the concept of accounting which denotes the percentage of net
earnings which is not funded out as a dividend but retained by the companies to be ploughed
in its other essential business activities (Henderson, et. al., 2015).
Statements of changes in equity:
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