Assignment on Corporate Accounting (CA)
Added on 2020-05-16
11 Pages2815 Words81 Views
Finance
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Running head: CORPORATE ACCOUNTINGCorporate AccountingName of the Student:Name of the University:Author’s Note:Course ID:
1CORPORATE ACCOUNTINGTable of ContentsAnswer to Part (i):......................................................................................................................2Answer to Part (ii):.....................................................................................................................3Answer to Part (iii):....................................................................................................................3Answer to Part (iv):....................................................................................................................4Answer to Part (v):.....................................................................................................................5Answer to Part (vi):....................................................................................................................6Answer to Part (vii):...................................................................................................................7References:.................................................................................................................................8
2CORPORATE ACCOUNTINGAnswer to Part (i):Three main items are present in the statement of financial position of theorganisations, out of which equity is significant. Autosports Group Limited is not anexception from this rule. In compliance with the balance sheet statement of the organisationin 2017, three main items are listed in equity section, which include issued capital, share-based payments reserve and retained profits. Issued capital is the equity of the businessorganisations (Atanasov and Black 2016). The firms utilise in raising a part of capital neededfor their businesses. The issued capital is calculated by multiplying the par value of the shareswith the number of outstanding shares. The annual report of the organisation states that theissued capital has fallen from $478,500,000 in 2016 to $475,637,000 in 2017(Investors.autosportsgroup.com.au 2018).The main items falling under issued capital comprise of issuance of ordinary shares,cost of issuance of shares and income tax associated with issuance of shares. The next item inthe equity of Autosports Group Limited is reserves. According to the financial accountingconcept, reserve is taken into account as a part of the equity of the firm. This is adjudged inthe form of additional amount except for primary share capital. The recent annual report ofAutosports Group Limited states that it has issued shares-based payments reserve in 2017,which is valued at $392,000; however, no such reserves are there in 2016. In addition, the latest annual report of Autosports Group Limited states that it haspositive retained profits amounting to $12,198,000; however, it has experienced retainedlosses in 2016 amounting to ($101,000). Hence, it could be said that the organisation hasmade more profits than losses. The constituents involved in the retained profits of AutosportsGroup Limited are net income available to the shareholders, dividends paid or provided and
3CORPORATE ACCOUNTINGeffect of restatement (Schaltegger, Etxeberria and Ortas 2017). Thus, all the above-describedconstituents are the main equity items in the organisation. Answer to Part (ii):In the global firms, various forms of expenses could be seen and they are sellingexpenses, administrative expenses and other expenses. Out of these expenses, tax expensecould be considered as one of them. Moreover, tax expense is taken into account in the formof main liabilities of the companies owing to the state, federal and municipal governments ofthe nation (Damodaran 2016). The tax expense is computed through multiplication of thesuitable business tax with the income before taxes after some main items are factored such astax assets, non-deductible items and tax liabilities. Autosports Group Limited is not exemptedfrom this, since it incurs tax expenses as well. Based on the recent annual report of theorganisation, the income tax expense has been $6,035,000 in 2017, which was $8,000,000million in 2016.Based on the rules of the taxation law of Australia, the corporate tax rate is 30%(Gitman, Juchau and Flanagan 2015). According to this tax rate, the overall tax expenses forAutosports Group Limited would be $5,526,900 in 2017, which was $101,400,000 in 2016.This is the major tax expense of the firm for the years 2016 and 2017. It could be identifiedthat the overall tax expenses of the organisation have fallen in 2017 due to decline in incomefor the organisation in that year. Answer to Part (iii):Based on the above discussion, it could be stated that Autosports Group Limited hasrecorded total tax expense of $6,035,000 in 2017, which was $8,000,000 in 2016. On theother hand, if the tax rate is followed, the overall tax expenses for Autosports Group Limited
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