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Answer to Question (i): Balance Sheet Statements of an Organisation

   

Added on  2020-05-16

11 Pages2894 Words386 Views
FinanceCalculus and Analysis
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Running head: CORPORATE ACCOUNTINGCorporate AccountingName of the Student:Name of the University:Author’s Note:Course ID:
Answer to Question (i): Balance Sheet Statements of an Organisation_1

1CORPORATE ACCOUNTINGTable of ContentsAnswer to Question (i):...................................................................................................................2Answer to Question (ii):..................................................................................................................2Answer to Question (iii):.................................................................................................................3Answer to Question (iv):.................................................................................................................4Answer to Question (v):...................................................................................................................5Answer to Question (vi):.................................................................................................................6Answer to Question (vii):................................................................................................................6References:......................................................................................................................................9
Answer to Question (i): Balance Sheet Statements of an Organisation_2

2CORPORATE ACCOUNTINGAnswer to Question (i):A balance sheet statement of an organisation consists of three items, namely, assets,liabilities and equity. CSR Limited contains these three items as well. According to the balancesheet statement of 2017 of the company, the main items of equity are issued capital, retainedprofits and reserves. The equity of the business organisations is considered as issued capital (DeSimone 2016). By multiplying the outstanding shares with the par value of the securities, issuedcapital is calculated. It has been found out that the issued capital of CSR Limited has fallen from$1,041.1 million in 2016 to $1,036.8 million in 2017 (Csr.com.au 2018). The next item in line of equity for CSR Limited is reserves. In the words of Klassen,Lisowsky and Mescall (2015), reserve is the equity portion of a firm, which is considered as theexcess amount keeping aside basic share capital. The current annual report of the company statesthat reserves have fallen massively from $20.4 million in 2016 to ($73.4 million) in 2017. The final item falling under the equity category of CSR Limited is retained profits. Itsignifies the total profit and losses that the company has made since its date of establishmentdecreased by dividend payments to the shareholders (Andries, Gallemore and Jacob 2017). Asidentified from the annual report of the company, the retained profits have increased from $123.2million in 2016 to $191.6 million in 2017, which signifies that it has earned more profits than ithas suffered losses. Answer to Question (ii):A firm often incurs certain kinds of expenditures, which constitute of administrativeexpenses, selling expenses and other expenses. Out of these other expenses, tax expense is one ofthem. Moreover, a significant liability of the firm is tax expense, which should be paid to the
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3CORPORATE ACCOUNTINGstate, federal and state governments of the nation (Armstrong et al. 2015). By multiplying theappropriate business tax with the income before tax after some significant items are factoredsuch as tax assets, non-deductible items and tax liabilities. CSR Limited falls in this category aswell, since the business incurs tax expense as well. The current annual report of the companystates that it has incurred tax expense of $61.7 million in 2017, which was $64.4 million in 2016from its profit before tax. The regulations of the taxation law of Australia state that the corporate tax rate of theAustralian firms is 30%. Depending on this tax rate, the organisation has computed its overall taxexpense. It could be observed that the tax expense of CSR Limited has fallen in 2017, as the firmhas experienced a fall in its net income compared to 2016. Answer to Question (iii):It has been identified from the above section that CSR Limited has incurred tax expenseof $61.7 million in 2017, which was $64.4 million in 2016 from its profit before tax. Along withthis, the current annual report of the organisation denotes that the standard tax rate of 30% isapplied in 2017 and 2016 to arrive at the total tax expense. If this particular tax rate is applied,the tax expense of CSR would be $80.04 million in 2017 and $70.11 million in 2016. However,the organisation has incurred tax expense in both the years, which do not match with the taxexpense, if the standard tax rate of the nation is applied (Clausing 2016).This is because certain items are not included in calculating the preliminary tax expense.These items could be adjudged as the reasons for the variation in tax expense. In case of CSRLimited, five items have additional impact on the tax expenses of the firm. The deductibleexpense is the initial item, which need not be added with the income of the firm. Due to this,
Answer to Question (i): Balance Sheet Statements of an Organisation_4

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