Corporate Accounting: Cash Flow, Other Comprehensive Income Statement, and Corporate Income Tax

This report provides an analysis of the cash flow statement, other comprehensive income statement, and accounting for corporate income tax for Telstra Corporation Ltd. The cash flow statement is classified into operating activities, investing activities, and financing activities. The other comprehensive income statement includes foreign currency translation reserve, cash flow hedging reserve, and foreign currency basis spread reserve. The report also covers corporate income tax, including tax expense, deferred tax assets and liabilities, and franking credits.

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1CORPORATE ACCOUNTING
Table of Contents
Cash flow statement:........................................................................................................................2
Requirement (i):...........................................................................................................................2
Requirement (ii):..........................................................................................................................6
Other comprehensive income statement:.........................................................................................7
Requirement (iii):.........................................................................................................................7
Requirement (iv):.........................................................................................................................7
Requirement (v):..........................................................................................................................8
Accounting for corporate income tax:.............................................................................................8
Requirement (vi):.........................................................................................................................8
Requirement (vii):........................................................................................................................8
Requirement (viii):.......................................................................................................................9
Requirement (ix):.........................................................................................................................9
Requirement (x):..........................................................................................................................9
Requirement (xi):.......................................................................................................................10
References......................................................................................................................................11

2CORPORATE ACCOUNTING
Cash flow statement:
Requirement (i):
The report has presented the cash flow analysis for “Telstra Corporation Ltd” which is
identified as a public company leading in telecommunications service in Australia. The company
is recognised for offering wide range of communication channels across different computing
markets of telecommunication. The important classification of “cash flow statement” for the
company has been done based on “operating activities, investing activities and financing
activities” (Telstra.com.au, 2018).
Cash flows from operating activities:
The important considerations under the items for cash for the operating activities includes
“Receipts from customers”, “Payments to suppliers and employees (Inclusive of GST)”,
“Government grants received”, “Net placement of deposits by Autohome Inc. that are not part of
cash equivalents” along with payment of IT. The company has experienced a significant surge in
the receipts from customers. This is depicted with increasing the total amount of receipt from “$
31163 in 2016 to $ 31288 in 2017” (Miao, Teoh & Zhu, 2016). Despite of this, the increase in
the overall operations had led to more amount of cash generation towards the suppliers and
employees in 2017 compared to 2015 and 2016. In 2016, the company comprised of the essential
item for “Net placement of deposits by Autohome Inc.”, which were not included under cash
equivalent. In addition to this, there was a considerable increase in financial assistance by
government in 2017. Similarly, the IT payment dropped from “$ 1860 in 2016 to $ 1751 in
2017” (Grant, 2016).

3CORPORATE ACCOUNTING
Cash flows from investing activities:
The items included under the list of cash from the investing activities are depicted as
follows:
 “Payments for property, plant and equipment”
 “Payments for intangible assets”
 “Payments for business and shares in controlled entities (net of cash acquired)”
 “Payments for joint ventures and associated entities”
 “Payments for other investments”
 “Proceeds from sale of property, plant and equipment”
 “Proceeds from sale of business and shares in controlled entities (net of cash disposed)”
 “Proceeds from sale of other investments”
 “Distributions received from joint ventures and associated entities”
 “Interest received”
 “Other investing activities” (Telstra.com.au, 2018)
The important items associated with the fixed assets such as “property, plant and
equipment”, is taken into account with proceeds from advances in deposits. Moreover, the
payments related to “property, plant and equipment” act as the amount which are needed for

4CORPORATE ACCOUNTING
conduction of business activity. On the other hand, these assets have been conducive in
feeding several economic assistances for “Telstra Corporations” which have been duly
considered under proceeds. The company has experienced a rise in terms of proceeds from
sales of other investment which has been clearly depicted in the gas generation from the
items considered under fixed assets such as PPE. The aforementioned proceeds are further
considered as the main contract specified with total tenure of payment and the amount which
is received with IT payable. Despite of this, the overall utilisation of cash in several investing
activities is clearly inferred in case of Telstra by depicting more cash payments than cash
received in the subsequent years. This is mainly considered with the increasing “payments
for intangible assets and PPE” (Penman & Yehuda, 2015).
Cash flows from financing activities:
The several borrowings made by Telstra corporations has been signified with “net
amount disbursed to a borrower on the part of the lender under the terms of loan agreement”.
Some of the main cash items from financing activities of Telstra are extrapolated in form of:

5CORPORATE ACCOUNTING
 “Proceeds from borrowings”
 “Repayment of borrowings”
 “Repayment of finance lease principal amounts”
 “Share buy-back”
 “Purchase of shares for employee share plans”
 “Finance costs paid”
 “Proceeds from sale of controlled entity shares”
 “Dividends paid to equity holders of Telstra Entity”
 “Other financing activities” (Penman & Yehuda, 2015)
The important consideration of cash from financing activities are realized with the proceeds
from borrowings which have considerably reduced in 2017. Moreover, the company has made
more repayment for the borrowings in 2017, compared to 2016 and 2015. Additionally, the total
sum of buyback of shares have considerably grown in the recent times. The reason for decreasing
“net cash flows used in financing activities” can be clearly seen with the dividends paid to equity
holders. The total amount for equity was seen with $ 3763 in 2017. Furthermore, it can be seen
that an augmented emphasis was put fit proceeds from borrowings and “purchases of shares from
the employee share plans” (Robinson et al., 2015).

6CORPORATE ACCOUNTING
Requirement (ii):
Based on the financial report of “Telstra corporations Ltd”, the segregation of CGU
“operating activities, investing activities and financing activities” has been clearly illustrated
(Miao, Teoh & Zhu, 2016). The presentation of comparative analysis in all the aforementioned
areas have been performed with a bar diagram:
2015 2016 2017
0
1000
2000
3000
4000
5000
6000
7000
8000
9000 8311 8133 7775
5692
2207
4279
6882
3777
6104
Comparative analysis of cash flow
categories of Telstra Corporation Ltd.
Net cash flows from operating activities Net cash flows used in investing activities
Net cash flows used in financing activities

7CORPORATE ACCOUNTING
The important evictions from the figure have clearly suggested about the “net cash flow
from operating activities” which are consistent in 2015, 2016 and 2017. This is mainly evident
due to increasing nature of payment of cash to the employees and the vendor’s comprising of
GST amount. On the other hand, the total amount of cash flow in the investing activity has been
depicted with a significant increase from 2015 to 2016 for “proceeds from sale of business and
shares in controlled entities” (Qamar, Khalil & Akhtar, 2016). Despite of this, there was a
considerable decrease in the observed value for Telstra corporations in 2017 for turning to excess
amount of payment made in intangible assets. Therefore, a significant increase from the sales
proceed was offset for other investing activities in 2017. This was mainly evident with
investment made in “property plant and equipment” and “payment for intangible assets”.
Henceforth, leading to more payment for the fixed assets and less amount in terms of
distributions obtained from joint ventures, the company attained a cash crunch for the investing
activities in 2017 (Nejad, Ahmad & Embong, 2018).
Other comprehensive income statement:
Requirement (iii):
The various excerpts taken from the financial statement of Telstra corporations Ltd has
been used to identify the other comprehensive income in terms of “Foreign currency translation
reserve, Cash flow hedging reserve and Foreign currency basis spread reserve” (Ramanna,
2014).
Requirement (iv):
It needs to be noted that the company utilized the reserve for translation in foreign
currency for converting the foreign subsidiaries of parent form to reporting entity’s currency.

8CORPORATE ACCOUNTING
Additionally, the cash flow hedging reserve is beneficial for interpreting the actions taken by the
firm to reduce the variations in cash flow pertaining to any asset or liability. The IT experience is
depicted to be incurred on items such as PBT for Telstra (Reid & Myddelton, 2017).
Requirement (v):
A good explanation of net income is associated with the fictions of other comprehensive
income. Telstra corporations Ltd have been depicted to incorporate essential details for
comprehensive income. The main rationale for such a statement is due to the fact that the
company has disclosed the “other comprehensive income statement” which has provided a more
elaborated view of the factors related to business operations (Telstra.com.au, 2018).
Accounting for corporate income tax:
Requirement (vi):
The important obligation for tax expense was mainly considered with the factors related
to proceedings from state government, municipal activities and federal government activities.
With particular reference to Telstra, the overall amount of total IT expense amounted to “$ 1773
in 2017 in contrast to $ 1768 in 2016” (Telstra.com.au, 2018).
Requirement (vii):
It needs to be discerned that Telstra corporations was able to earn net PBT expenses of “$
5600 in 2016 and $ 5647 in 2017”. This value is clearly inherent with the 30% tax rate on PBIT
(Telstra.com.au, 2018).

9CORPORATE ACCOUNTING
Requirement (viii):
The overall review of DTA is taken into consideration by the end of each period of
reporting. Additionally, the total carrying amount is recognised with the future probable taxable
profit along with the benefits which can be utilised by the company. Furthermore, the company
has been depicted to offset the total amount of DTL and DTA from the financial statement which
were associated with IT levied by the relevant taxation authorities (Telstra.com.au, 2018).
Requirement (ix):
The important disclosures associated to franking credits were the net result of IT payable
amounting to “$ 146m in 2017 and $ 158m in 2016”. Furthermore, the total sum of income tax
payable in 2017 was depicted as $161m and $176m in 2016 (Telstra.com.au, 2018).
Requirement (x):
The significant disclosures made in the IT expense can be clearly discerned with current
tax expense which are identified with “Deferred tax resulting from the origination and reversal of
temporary differences” and “Under provision of tax in prior years”. Moreover, the IT expense
based on “Notional income tax expense calculated at the Australian tax rate of 30%” was valued
at $ 1694 in 2017 and $ 2294 in 2016 respectively (Telstra.com.au, 2018).

10CORPORATE ACCOUNTING
Requirement (xi):
The important excerpts from the treatment of tax for Telstra Corporation is evaluated to
on profit even after deduction of IT expense. This amount can be inferred with the growth “net
profit after tax from continuing operations up by 1.1% to $3.9 billion” (Telstra.com.au, 2018).

11CORPORATE ACCOUNTING
References
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Miao, B., Teoh, S. H., & Zhu, Z. (2016). Limited attention, statement of cash flow disclosure,
and the valuation of accruals. Review of Accounting Studies, 21(2), 473-515.
Miao, B., Teoh, S. H., & Zhu, Z. (2016). Limited attention, statement of cash flow disclosure,
and the valuation of accruals. Review of Accounting Studies, 21(2), 473-515.
Nejad, M. Y., Ahmad, A., & Embong, Z. (2018). Value Relevance Of Other Comprehensive
Income. Asian Journal of Accounting and Governance, 8, 133-144.
Penman, S. H., & Yehuda, N. (2015). A matter of principle: Accounting reports convey both
cash-flow news and discount-rate news.
Qamar, M.A.J., Khalil, F. & Akhtar, W., (2016). Corporate Governance Culture Transmission in
Mutual Funds: Directors as Vector of Transmission. International Journal of Academic
Research in Accounting, Finance and Management Sciences, 6(2), pp.175-183.
Ramanna, K., (2014). Political standards: Accounting for legitimacy.
Reid, W., & Myddelton, D. R. (2017). Cash flow statement. In The Meaning of Company
Accounts (pp. 16-16). Routledge.
Robinson, T. R., Henry, E., Pirie, W. L., & Broihahn, M. A. (2015). International financial
statement analysis. John Wiley & Sons.

12CORPORATE ACCOUNTING
Telstra.com.au. (2018). [online] Available at:
https://www.telstra.com.au/content/dam/tcom/about-us/investors/pdf%20D/telstra-
annual-report-2015.pdf [Accessed 23 May 2018].
Telstra.com.au. (2018). [online] Available at:
https://www.telstra.com.au/content/dam/tcom/about-us/investors/pdf%20D/telstra-
annual-report-2016.pdf [Accessed 23 May 2018].
Telstra.com.au. (2018). [online] Available at:
https://www.telstra.com.au/content/dam/tcom/about-us/investors/pdf%20D/telstra-
annual-report-2017.pdf [Accessed 23 May 2018].
Telstra.com.au. (2018). Telstra - Our company. [online] Available at:
https://www.telstra.com.au/aboutus/our-company [Accessed 21 May 2018].