Corporate Accounting Assignment | Financial Position

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of the Student
Name of the University
Authors Note
Course ID

CORPORATE ACCOUNTING1
Table of Contents
Answer to question I:.................................................................................................................2
Answer to question II:................................................................................................................3
Answer to Question III:..............................................................................................................4
Answer to question IV:..............................................................................................................4
Answer to question V:................................................................................................................6
Answer to question VI:..............................................................................................................6
Answer to question VII:.............................................................................................................7
Reference List:...........................................................................................................................9

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Answer to question I:
An important assertion regarding financial report is that it provides the snapshot for
the financial position for the organizations particularly the statement of financial position.
Three major items form the part of the balance sheet namely the assets, liabilities and owners’
equity. In the present context the latest financial report of Fletcher Building Ltd is undertaken
for the financial year of 2017 for conducting the analysis. Under the heads of Equity Fletcher
Building Ltd has reported capital and reserve (Sözbilir, Kula and Baykut 2015). During the
year 2016, the amount of equity reported by the company stood 2650 while in the subsequent
year of 2017 the amount of equity stood 2678. Similarly, under the heads of equity there also
consisted of reserve. The reserve for Fletcher Building Ltd stood $1,041 in the year 2016
while in the following year of 2017 the Reserve stood 2,678 respectively.
The primary objective of issuing equity shares by Fletcher Building Ltd was to raise
the capital. The method of computing the issued capital is multiplying the total amount of the
outstanding shares with the total amount of equity shares (Badenhorst, and Ferreira 2016).
Fletcher Building Ltd the issued shares at the begging of the year standing 692,501,249 and
under the dividend reinvestment plan the company issued 3,419,925 with total amount of
share that is issued during the year stood 695,921,925.
Another item under the heads of equity stands Reserve. Reserve is regarded as the
amount that is paid to the shareholders beside the basic price of the shares. The total amount
of reserve stated by the corporation stood $1,041 in the year 2016 while in the following year
it declined to $878. This is because the variations in exchange originating from the translation
of entities and other currency instrument designed in the form of hedge of investments is
identified in directly to the currency translation reserve (Chytis 2015). Additionally,
whenever the derivative financial instrument is designated in the form of hedge of variations

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in the cash flow of assets the effective portion of the gain or loss is identified directly in the
cash flow hedge reserve within equity and immediate earnings.
Answer to question II:
The execution of business operations requires organizations to experience different
types of operating expenditure, selling and administrative expenditure and other
miscellaneous expenditure. Tax expenditure is regarded as one of the essential part of the
business expenditure. Tax expenditure can be defined as the expenditure or the liability that is
owned to the federal, state or provincial and municipal governments (Wang, Butterfield and
Campbell 2016). Tax expenditure is computed by multiplying the adequate tax rate with the
business income generated prior to tax after taking into the account the factor such as the
non-deductible items, tax assets and tax liabilities.
As evident from the current context of the Fletcher Building Ltd tax expenses
reported by the company stood for the year ended 2016 stood $131 million whereas in the
subsequent year of 2017 the income tax expenditure that is reported by the company stood
$57 million. It is vital for the Fletcher Building Ltd to determine the tax computations
appropriately and make a payment based on the yearly basis (Lubbe, Modack and Watson
2014). In the present context, it is necessary for the company to make payment to the income
tax expenditure to both the federal and statement government. Firms are required to pay tax at
the rate of 30%. As evident from the latest financial report of the firm Fletcher Building Ltd
stated that the tax expenditure of $57 million represents an effective tax rate of 35% that has
been particularly influenced by the significant items reporting in the financial year (Jordan
2016). The income tax rate excludes the significant items with effective tax rate of 20%.