Answer to Questions Tagged Accounting Name of the University Authors Note
Added on 2020-05-28
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Running head: CORPORATE ACCOUNTINGCorporate AccountingName of the StudentName of the UniversityAuthor’s Note
1CORPORATE ACCOUNTINGTable of ContentsAnswer to Question I.......................................................................................................................1Answer to Question II......................................................................................................................2Answer to Question III....................................................................................................................3Answer to Question IV....................................................................................................................4Answer to Question V.....................................................................................................................5Answer to Question VI....................................................................................................................5Answer to Question VII...................................................................................................................6References........................................................................................................................................8
2CORPORATE ACCOUNTINGAnswer to Question IFinancial statements provide the snapshot of the financial position of the companies,especially the balance sheet. Assets, Liabilities and Owner’s Equity are considered as threemajor items of balance sheet. The latest annual report of Boral Limited shows the presence ofthree major items under the head ‘Equity’; they are Issued Capital, Reserves and RetainedEarnings (Cohen-Cole & Martinez-Garcia, 2013). The 2017 annual report of Boral Limitedshows a massive increase in the amount of issued capital; that is $ 4,256.1 million in 2017 and $2,246.2 million in 2016 (Boral.com, 2017). The main purpose of the issue of equity shares is tofulfill the capital requirement. The way to calculate issued capital is to multiply the total numberof shares outstanding by the total number of shares. In Boral Limited, the number of issuedshares in 2017 and 2016 are 1,172,331,924 and 743,599,437 respectively. In 2017, Boral Limitedundertook an equity rising of $ 2,018.9 million with a net transaction cost of $ 38.9 million.Boral Limited issued the shares under three heads; they are 93,750,000 ordinary shares underInstitutional Placement; 233,648,069 ordinary shares under Institutional Entitlement Offer; and101,334,418 ordinary shares under Retail Entitlement Offer (Boral.com, 2017). The next equityitem is reserve. Reserve in equity is considered as the extra amount paid by shareholders apartfrom the basic price of the shares. Massive decrease in the equity reserve of Boral Limited can beseen in 2017 as the amount decreased to $ 19.3 million in 2017 from $ 162.0 million in 2016.Four kinds of reserves can be seen in Boral Limited; they are Foreign Currency TranslationReserve (FCTR), hedging reserve, share-based payment reserves and other reserves (Boral.com,2017). It can be observed that there is not any reserve under the head of ‘other reserve’ in 2017.The last item under equity of Boral Limited is Retained Earning. Retained earnings refer to thetotal profit and loss of the companies from the formation time. Positive retrained earning shows
3CORPORATE ACCOUNTINGthe presence of more profit in the companies than losses. There is an increase in the retainedearnings of Boral Limited in 2017; that is $ 1,156.1 million in 2017 from $ 1,098.1 million(Boral.com, 2017). Answer to Question IIAt the time of carrying on the business operations, companies have to incur differenttypes of expenses like operating expenses, selling expenses, administrative expenses and others.Tax Expenses is considered as one of them. Tax expenses of the companies can be derived bymultiplying the business tax by income before taxes after doing all the tax reconciliation(Burman & Phaup, 2012). It is also mandatory for Boral Limited to make their tax calculationcorrectly and pay them on yearly basis. In this context, it is required to be mentioned thatcompanies are required to pay tax expenses to the federal government and state government ofthe companies. The Australian Taxation Law has imposed a tax rate of 30% for the Australiancompanies. The latest income statement of Boral Limited shows the rise in the income taxexpenses of the company. The income tax expenses in 2017 and 2016 are $ 51.4 million and $35.6 million (Boral.com, 2017). The main reasons for the rise in income tax expenses can beeither the increase in tax rate or profit before income tax or both. The annual report of BoralLimited shows that there has not been any change in tax rate from 2016 to 2017. Thus, the mainreason behind the increase in tax expenses in Boral Limited is the increase in profit beforeincome tax; that is $ 301.0 million in 2017 and $ 281.1 million. In the statement of cash flow ofBoral Limited, the amounts of tax expenses are $ 41.8 million and $ 69.4 million (Boral.com,2017).
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