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Corporate Accounting : Assignment

   

Added on  2020-10-05

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CORPORATE ACCOUNTING

EXECUTIVE SUMMARYCorporate accounting is referred as branch of accounting which deals with accounting onbasis of organization and for framing final accounts along with cash flow statements. Thepresent report will discuss about Horizon oil limited, Universal Coal Plc and Beach EnergyLimited company which comprises in energy sector. This report will reflect various informationon basis of other comprehensive income statements such as reason for not including these itemsin income statement. Lastly, this report will state accounting for corporate income tax whichcomprises effective tax rate, deferred tax asset and liability and difference among cash tax andbook tax rate. Thus, it had been evaluated that other comprehensive income should not be statedin profit and loss statement as it could be used for elaborating manager's performance.

TABLE OF CONTENTSEXECUTIVE SUMMARY.............................................................................................................2INTRODUCTION...........................................................................................................................1EQUITY AND LIABILITIES.........................................................................................................11. Stating every item of equity and changes over past three years with reason.....................12. Stating each item of liability and alterations over past three years with reason.................33. Comparative analysis of debt equity position of chosen three firms..................................5CASH FLOW STATEMENT .........................................................................................................54. Stating every item of cash flow statement with appropriate understanding.......................55. Providing comparative analysis of three broad categories of cash flow over past three years................................................................................................................................................66. Comparative analysis of companies with particular insights.............................................8OTHER COMPREHENSIVE INCOME STATEMENT ...............................................................87. Items stated in other comprehensive income for every company......................................88. Reason for items not considered in profit and loss statement ...........................................99. Comparative analysis of OCI items of these organization.................................................910. OCI must be included for evaluating managers’ performance of company or not........11ACCOUNTING FOR CORPORATE INCOME TAX..................................................................1111. Tax expenses reflects in financial statements ................................................................1112. Calculating effective tax rate..........................................................................................1113. Commenting on deferred tax asset and liability ............................................................1214. Reflect any change in deferred tax asset and liability....................................................1215. Calculating cash tax amount with book tax amount, deferred tax asset and liability....1316. Calculating cash tax rate of each company....................................................................1317. Difference among cash tax and book tax rate................................................................14CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................16APPENDIX....................................................................................................................................17Beach energy Limited 2017-2018........................................................................................17Beach energy 2016-2017......................................................................................................21

Horizon Oil Limited 2017-2018...........................................................................................23Horizon Oil Limited 2016-2017...........................................................................................25Universal cola PLC 2017-2018............................................................................................29Universal cola PLC 2016-2017............................................................................................31

INTRODUCTIONCorporate accounting is considered as branch of accounting which directly deals withaccounting with context of organization and to prepare final accounts along with cash flowstatements. In the similar aspect, it will analyse and interpret financial outcome of organizationand accounting with reference to some particular events like absorption, amalgamation andpreparation of consolidated financial statements. The present report will discuss about Horizonoil limited, Universal Coal Plc and Beach Energy Limited company with various importantsections. At the initial stage, it will reflect every item of equity along with changes over pastthree years with their reasons and comparative analysis of their debt equity position. In thesimilar aspect, it will be stating every item of cash flow statement with three broad categoriesand comparative analysis of these three companies. This report will reflect various informationon basis of other comprehensive income statements such as reason for not including these itemsin income statement. Lastly, this report will state accounting for corporate income tax whichcomprises effective tax rate, deferred tax assEQUITY AND LIABILITIES1. Stating every item of equity and changes over past three years with reason20162017%changein 201720172018%changein 2018Universal coal PlcShare capital43374444662.52%44466444660.00%Reserves2498755-69.78%755625-17.22%Retained earnings/Accumulated losses-4218315403-136.51%154036863-55.44%Share premium529410-100.00%000.00%Total equity56630606247.05%6062451954-14.30%The above change in equity has provided with shared capital, reserves, retained earnings,and share premium. The share capital is the amount which is issued to the public. Moreover, thereserves are the profit of the firm which are retained for the future use. Retained earning arethose which are used in business activities rather than providing as the divided to the1

shareholders. Share premium is the amount received by the company which exceeds the facevalue of the shares.From the above table it is to be analyzed that in 2017, Universal coal Plc has reduced theirreserves with -69.78% and increased their share premium with 100.00%. In 2018, againcompany reduced their reserves and share premium with -17.22 and 0.00%. Because of this thereis a change in equity with 7.05% in 2017 and -14.30% in 2018. Therefore, in order to generatereturn on equity company have to use more financial leverages where company financethemselves with debt and equity capital. Effective dividend policy also helps in gaining return inequity.20162017%changein 201720172018%changein 2018Horizon oil LimitedContributed equity1748011748010.00%1748011748010.00%Reserves120301455821.01%145585740-60.57%Accumulated losses(82217)(82633)0.51%(82633)(85232)3.15%Non controlling interest800-100.00%000.00%Total equity1045341067262.10%10672695309-10.70%It can be interpretate from above table that in 2017, Horizon Oil Ltd. Increased theirreserves and non controlling interest with 21.01% and with 100.00%. In 2018, company havereduced their reserve and non controlling interest with -60.57% and 0.00%. Because of thischange, in 2017 change in equity is 2.10% and in 2018, it is -10.70% Major effect on change inequity is because of its non controlling interest by which its total equity reduced. With thisstatement it can be analyzed that owner's needs to work upon its strategies like effective dividendpolicy, increase of profit margin which helps in improving change in equity.20162017%changein 201720172018%changein 2018Beach energy limitedContributed equity1548.71558.50.63%1558.51859.119.29%2

Reserves283.3232.2-18.04%232.2210.3-9.43%Retained earning/Accumulated losses757.5388.7-48.69%388.7-231.440.47%Total equity1074.5140230.48%1402183831.10%Above table explained that in 2017, Beach energy limited has reduced their reserves andretained earning with -18.04% and -48.69%. In 2018, also company has reduced their reservewith -9.43% and retained earning with -40.47%. With this, change in equity of company in 2017is 30.48% and 31.10% in 2018. Retained earning of the business affected because of any increaseor decrease in net income and dividend paid to shareholder of the company. 2. Stating each item of liability and alterations over past three years with reason20162017% change in201720172018% changein 2018Universal coal PlcBorrowings000%000.00%Converting notes48911476-69.82%14760-100.00%Derivative financialinstrument1658277-83.29%2770-100.00%Deferred tax000000.00%Provisions000000.00%Current liabilities65491753-73.23%17530-100.00%Borrowings000000Current tax payable000000Trade and otherpayable16621831.33%21867-69.27%Non currentliabilities16621831.33%21867-69.27%Total liability67151971-70.65%197167-96.60%The above items of liabilities provided with converting notes, derivative financialinstrument, current liabilities, trade and other payable etc. Converting notes is the form of debtwhich are converted into equity. Derivative financial instruments are the liabilities includesbonds, interest rates etc. Current liabilities are the amount which is due to the creditors and it is3

the responsibility of the company to pay the amount within twelve months. Non currentliabilities are those which are not payable within one year.It can be analyzed from above calculation that in 2017, Universal Coal Plc company havedeveloped major change in its derivative financial instrument and in 2018, overall liabilities ofcompany has been reduced to nil because of which its change in liability result in -90.60% whichprovide an impact on business structure. When equity portion of business decline, liabilityportion in balance sheet increases.20162017% change in201720172018% changein 2018Horizon oil LimitedPayable125019950-20.41%99501947995.77%Current tax payable125354183.20%3542946732.20%Borrowings7693722132-71.23%2213275145239.53%Other financialliabilities5300-100.00%010768100.00%Provisions4280-100.00%000.00%Current liabilities9052132436-64.17%32436108338234.01%Payable222827.27%2862121.43%Deferred taxliabilities159241770511.18%17705178760.97%Other financialliabilities025310253122995808.53%Borrowings6742810266652.26%10266636867-64.09%Provisions8243961116.60%961128185193.26%Non currentliabilities9161713254144.67%132541105985-20.04%Total liability182138164977-9.42%16497721432329.91%It is to be analyzed from above calculation that in 2017, Horizon Oil Ltd has broughtmajor changes in its other financial liabilities and in provision because of that result change inliability reduced to -9.42%. In 2018, company has also brought change by increasing othercurrent liability with 808.53% which result in increase with 29.91% (Annual report of Universal4

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