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

This article discusses the cash flow statement, other comprehensive income statement, and accounting for corporate income tax of CSR Limited. It includes a comparative analysis of cash flows, items in the other comprehensive income statement, and reported income tax expenses and assets.

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

1CORPORATE ACCOUNTING
Cash Flow Statement
Requirement [i]
The following discussion sheds light on each of the items listed in the 2017 Cash Flow
Statement of CSR Limited along with their increase or decrease over the past year with possible
reason:
Cash Flow from Operating Activities: In CSR Limited, the five crucial items listed under this
head of cash flow are receipts from customers, payment to suppliers and employees, dividend
received, interest received and income tax paid.
CSR Limited receives certain amount of money as a result of credit sales from their
customers and there is increase in this income in 2017; $2726 million in 2017 and $2499.5 in
2016 (csr.com.au, 2018). The only reason for the increase in this item can be the increase in
credit sales. On the contrary, CSR Limited is payable to their suppliers for the purchase of raw
materials and they also require to provide the compensation to their employees. An increasing
trend is also here in this item; $2424.6 million in 2017 from $2246.4 million in the past year
(csr.com.au, 2018). Business expansion might lead the company to take more orders from
customers that increases the raw material purchase; in addition, increase in employees might lead
to the increase in this payment. CSR Limited has their shares purchased in other companies that
generate dividend for the company and this income has increased over the past year that is $14.2
million in 2017 and $11.2 million in the past year. CSR Limited receives certain amount as
interest in every year and this income has decreased over the last year that is $1.9 million and
$2.5 million in 2017 and 2016 respectively. Increase in the profit margin of CSR Limited has led

2CORPORATE ACCOUNTING
to the increase in their income tax payment; and it is $52.7 million and $14.6 million in the years
2017 and 2016 respectively (csr.com.au, 2018).
Cash Flow from Investing Activities: The reported items under this head of cash flow for CSR
Limited are purchase of property, plant and equipment and other assets, proceed from sales of
the same, businesses or other controlled entities purchased, payment of acquisition cost and loan
and receivable repayment.
In the year 2017, CSR Limited has not purchased many property, plant and equipment
with other assets when compared to the last year; that is ($92.2 million) in 2017 and ($120.2
million) in 2016. It might happen that CSR Limited has these assets as per their requirements
(csr.com.au, 2018). At the same time, the company has not made much sales of these assets in
2017 when compared to 2016; that is $44.7 million and $71.2 million in the years 2017 and 2016
respectively. The reason for this can be the intention of CSR Limited to increase their asset base
for generating better business. CSR Limited does the acquisition of businesses if there is any
good opportunity. The 2017 figures show that the company has not made any large acquisition in
this as large decrease in this outflow in evident; that is ($3.5 million) and ($12.8 million) in the
year 2017 and 2016 respectively (csr.com.au, 2018). It is the obligation on the company to bear
the necessary expenses at the time of business acquisition. Decrease in this expenses in 2017 is
there due to the decrease in business acquisition; that is ($ 3.4 million) and ($ 12.8) million in
2017 and 2016 (csr.com.au, 2018). On the term of maturity, CSR Limited is liable to make the
repayment of their advances on loans and the company has made large repayment in 2017 as
compared to 2016; that is ($5.3 million) and $0.1 million in 2016. However, CSR Limited took
advance loan in the year 2016.

3CORPORATE ACCOUNTING
Cash Flow from Financing Activities: In CSR Limited, the items recorded under this head of
cash flow are share buy-back, borrowings repayment, dividend payment, acquisition of shares,
interest and other transaction cost payment and transitions with the non-controlling interests
(csr.com.au, 2018).
There are instances when CSR Limited repurchase their issued shares and the increase in
this buy-back of share can be seen in the year 2017 and compared to 2016; that is ($4.3 million)
in 2017 and ($ 1.1 million) in the year 2016. From the cash flow statement, it can be observed
that CSR Limited has drawn their borrowings in the year 2017 where the company concentrated
on the payment of borrowings in 2016; the amounts are $28.3 million in 2017 and ($10.4
million) in the year 2016 (csr.com.au, 2018). In the year 2017, the company decided to increase
the dividend for their shareholders for the year 2017 as a result of increase in profitability; that is
($146.7 million) in 2017 and ($144.9 million) in the year 2016. CSR Limited does the
acquisition of shares from the share trust from the CSR employees and decrease in this outflow
can be seen in the year 2017 as compared to 2016; that is ($5.4 million) and ($7.1 million) in the
years 2017 and 2016 respectively (csr.com.au, 2018). Increase in the payment of interest and
other costs can be seen in 2017 as compared to 2016; that is ($3.4 million) and ($3.2 million) in
2017 and 2016 respectively (csr.com.au, 2018).

4CORPORATE ACCOUNTING
Requirement [ii]
2017 ($m) 2016 ($m) 2015 ($m)
(300.0)
(200.0)
(100.0)
-
100.0
200.0
300.0 264.8 252.2 234.3
(60.7) (80.8)
(45.4)
(257.9)
(166.7)
(126.8)
Cash Flow Operating
Activities
Cash Flow Investing
Activities
Cash Flow Financing
Activities
Figure 1: Comparative Analysis of Cash Flows of CSR Limited
(Source: csr.com.au, 2018)
From the above figure, a continuous increasing trend can be seen in the cash inflow from
the operating activities of CSR Limited over the last three years. These figures in the years 2017,
2016 and 2015 are $$234.3 million, $252.2 million and $264.8 million respectively (csr.com.au,
2018). Increase in the proceeds from the customers along with the increase in interest and
dividend received are the main reason behind this increase in cash inflow.
For the cash flow from investing activities, there was large cash outflow in the year 2016
as compared to the same in 2015; the amounts in 2016 and 2015 are ($80.8 million) and ($45.4
million) respectively. The increase in the purchase of property, plant and equipment was the
prime reason for this increase. However, dip in this cash outflow can be seen in the year 2017 as

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compared to 2016; that is ($ 60.7) million in 2017 from the last year. The main reason might be
the decrease in the purchase of the above-mentioned assets (csr.com.au, 2018).
The above figure also shows a major increasing trend in the cash outflow from investing
activities over the last three years; that is ($126.8) million in 2015, ($166.7 million) in2016 and
($257.9 million) in 2017 (csr.com.au, 2018). Increase in the payment of dividend can be
articulated the prime reason for this increasing trend. At the same time, major repayment of
borrowings can also be considered as the reason for this increase.
Other Comprehensive Income Statement
Requirement [iii]
The items recorded in the Other Comprehensive Income Statement 2017 of CSR Limited
are recognition of profit or loss related to hedging, transfer of this hedge profit or loss in the
statement of financial performance, difference of exchange in the transactions related to foreign
operations, fair value change in cash flow reserve and income tax benefits from these items
(csr.com.au, 2018).
Requirement [iv]
The conversion of the financial results of the foreign subsidiaries of CSR Limited to the
currency in which the financial reporting has done is the main purpose of foreign currency
translation reserve. This aspect is regarded as an important concern at the time of business
consolidation for the transformation of foreign currency in the reporting currency. After the re-
measurement of these currencies, they are recorded in the profit or loss account of CSR Limited
(Cao, 2017).

6CORPORATE ACCOUNTING
Removal or minimization of the risk exposure due to the change in the cash flow related
to any asset or liability is considered as the main aim of the use of cash flow hedge reserve. This
risk is occurred due to the change in interest rate, interest on debt and many others. Income tax
on these items refers to the obligation of CSR Limited to charge taxation on these transactions
(Eaton, Easterday & Rhodes, 2013).
Requirement [v]
The users can get a diversified picture about the profit position of the business entities
from the other comprehensive income statement. For CSR Limited, the aim behind the
preparation and presentation of this statement is to provide the investors with the information
about the above-discussed items so that they can get a holistic view about these items. Moreover,
they do not appear in the income statement/profit or loss statement as they are not directly
involved with the profit generation of CSR Limited (Gazzola & Amelio, 2014).
Accounting for Corporate Income Tax
Requirement [vi]
As per the 2017 Annual Report, 30% is the applicable tax rate for CSR Limited for 2017
and 2016 as per Australian taxation law. CSR Limited has reported $61.7 million and $64.4
million as their income tax expenses for the year 2017 and 2016 respectively (csr.com.au, 2018).
Requirement [vii]
The 2017 Annual Report of CSR Limited provides the evidence that there is difference
between the reported income tax expenses and the same as per the tax rate; and some reasons
contribute to this difference. Non-taxable profit from the disposal of property is one major reason
that required additional adjustments with the taxation expenses (csr.com.au, 2018). After that,

7CORPORATE ACCOUNTING
advanced payment and under payment of income taxes is another major reason as the advanced
tax or less paid tax is required to be adjusted with the current year’s taxation expenses. Lastly,
share of net profit on the entities of joint venture is another major reason as CSR Limited had to
do the adjustments of the extra payment of tax.
Requirement [viii]
The reported deferred tax assets by CSR Limited are $201.2 million in 2017 and $239.3
million in 2016. CSR Limited has no deferred tax liabilities in 2017 and the deferred tax liability
in 2016 is $20.9 million (csr.com.au, 2018). Both in 2017 and 2016, CSR Limited has paid
advances taxes as compared to the actual taxation expenses; and hence, this advance tax amount
is considered as differed tax assets for CSR Limited. On the contrary, the different in the rules of
financial accounting and taxation accounting contributed towards the less payment of tax on
depreciation by CSR Limited as compared to the actual. Hence, this less paid tax amount is
considered as the deferred tax liabilities (Chytis, 2015).
Requirement [ix]
The reported current tax assets of CSR Limited are of $0.5 million for both 2017 and
2016. For the year 2017 and 2016, CSR Limited has $10.3 million and $38.1 million as current
tax liabilities respectively (csr.com.au, 2018). There is difference between the income tax
expenses and income tax payable. The inclusion of all the taxation related expenses of CSR
Limited is there under the income tax expenses of CSR Limited. However, the occurrence of
income tax payable can be seen due to the less payment of income tax by the company in the last
year. This reason creates the difference (Harding, 2013).

8CORPORATE ACCOUNTING
Requirement [x]
CSR Limited has reported $61.7 million and $64.4 million as their income tax expenses
for the year 2017 and 2016 respectively in the income statement; and $52.7 million and $14.6
million as their income tax expenses in the cash flow statement for 2017 and 2016 respectively
(csr.com.au, 2018). Thus, difference can be seen in the income tax expenses in income statement
and cash flow statement. CSR Limited records the income tax expenses for the current year in
the income statement and the obligation is to make the payment of this in the next year.
However, the income tax expenses in cash flow include the current year income tax payment by
CSR Limited; and it can be advance income tax payment or payment of income tax for the last
year. Hence, difference can be seen (Tanzi, 2014).
Requirement [xi]
CSR Limited carries out their income tax accounting as per the required regulations and
provides all the necessary clarification and justification of income tax treatment in the notes to
the financial statements. This aspect eliminates the chances for confusion in the income tax
treatment. Moreover, the users can gain effective insight about how the large organizations carry
out their income tax treatment by observing the income tax treatment of CSR Limited.

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References
(2018). Csr.com.au. Retrieved 24 May 2018, from
http://www.csr.com.au/-/media/corporate/files/annual-reports/2015_annual-report-for-31-
march-2015.pdf
(2018). Csr.com.au. Retrieved 24 May 2018, from
http://www.csr.com.au/-/media/corporate/files/annual-reports/2016_annual-report-for-31-
march-2016.pdf
Annual Meetings and Reports. (2018). Corporate. Retrieved 22 May 2018, from
http://www.csr.com.au/investor-relations-and-news/annual-meetings-and-reports
Cao, Y. (2017). Performance reporting of comprehensive income and earnings
management (Doctoral dissertation, Boston University).
Chytis, E. (2015, February). Deferred Tax Assets from unused Tax Losses under the prism of
Financial Crisis. In International Conference on Business & Economics of the Hellenic
Open University, Athens. Retrieved from http://193.108 (Vol. 160).
Eaton, T. V., Easterday, K. E., & Rhodes, M. R. (2013). The presentation of other
comprehensive income. The CPA Journal, 83(3), 32.
Gazzola, P., & Amelio, S. (2014). The impact of comprehensive income on the financial ratios in
a period of crises. Procedia Economics and Finance, 12, 174-183.
Harding, M. (2013). Taxation of dividend, interest, and capital gain income.

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Tanzi, V. (2014). Inflation, indexation and interest income taxation. PSL Quarterly
Review, 29(116).