Corporate Accounting Assignment | Answers to Questions
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Added on 2020-05-16
Corporate Accounting Assignment | Answers to Questions
Added on 2020-05-16
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Running head: CORPORATE ACCOUNTINGCorporate AccountingName of the StudentName of the UniversityAuthor’s Note
1CORPORATE ACCOUNTINGTable of ContentsAnswer to Question I.......................................................................................................................2Answer to Question II......................................................................................................................3Answer to Question III....................................................................................................................3Answer to Question IV....................................................................................................................4Answer to Question V.....................................................................................................................5Answer to Question VI....................................................................................................................5Answer to Question VII...................................................................................................................6References........................................................................................................................................7
2CORPORATE ACCOUNTINGAnswer to Question IBalance sheet depicts the overall financial position of the business organizations at theend of the year. Three major factors of balance sheet are Assets, Liabilities and Equity. From thelatest annual report of Huon Aquaculture Group Limited, it can be observed that there are threemajor items under ‘Equity’; they are Contributed Equity, Other Reserves and Retained Earnings.Contributed equity refers to the equity capital used for raining capital. It can be seen that theamount of contributed equity has remained same for Huon Aquaculture Group Limited in 2017and 2016 that is $164,302,000. The main reason is that the company has issued same number ofshares in 2017 and 2016 that is 87,337,207 (investors.huonaqua.com.au 2018). The next item isOther Reserves that refers to the extra amount of money paid by the shareholders except thebasic share price (Brigham and Houston 2012). The latest annual report of Huon AquacultureGroup Limited shows increase in the amount of other reserves; that is $544,000 in 2017 and$255,000 in 2016 (investors.huonaqua.com.au 2018). Issue of shares with premium is the mainreason for this increase in other reserves. In addition, another major reason for increase in thereserves of the company is the presence of share-based payment expenses. As per the latestannual report, the company has incurred $289,000 in 2017 and $255,000 in 2016 as share basedpayment expenses. Retained Earnings refer to the amount not paid as dividend so that they canbe reinvested (Brigham and Ehrhardt 2013). Increase in retained earnings can be seen in 2017;that is $128,376,000 in 2017 and $86,216,000 in 2016. Huge increase in the net profit of thecompany is the main reason behind the increase in retained earnings (investors.huonaqua.com.au2018).
3CORPORATE ACCOUNTINGAnswer to Question IIBusiness organizations are required to incur different types of expenses so that thebusiness operations can be carried out in a smooth manner. Some of the major business expensesare selling expenses, administrative expenses, and direct expenses. One of such major expensefor the companies is Tax Expenses. It is the kind of expenditure that the business organizationsowes to the federal government and the state government. In the financial statements of HuonAquaculture Group Limited, the presence of tax expenditure can be seen. According to the latestannual report of Huon Aquaculture Group Limited, the company has reported $14,332,000 and$627,000 as the income tax expenses for the year 2017 and 2016 respectively(investors.huonaqua.com.au 2018). From the annual report of the company, it can be seen thatthe total expenses have been segregated into four parts; they are Current tax expenses or income,Adjustments for current tax of previous year, Increase in the differed tax assets and increase indeferred tax liabilities. In this context, it needs to be mentioned that the company has tax rate of30% in both 2017 and 2016. In addition, the company had to make certain adjustment in theactual taxation expenses for getting the reported tax expenses (Kusnirova 2014). Answer to Question IIIIt needs to be mentioned that the business organizations can obtain tax expenses bymultiplying the applied tax rate with the income before income tax after doing the necessaryadjustments. The annual report of Huon Aquaculture Group Limited states that the company has$56,492,000 and $4,054,000 as profit before income tax in 2017 and 2016 respectively. At 30%tax rate, the tax expenditure should be $16,948,000 ($56,492,000*30%) and $1,216,000($4,054,000*30%) in 2017 and 2016 respectively (investors.huonaqua.com.au 2018). However,these figures differ from the above reported tax expenses of the company. From the notes of
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