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

This article provides an analysis of the cash flow statement, other comprehensive income statement, and accounting for corporate income tax of Cromwell Property Group. It includes details about the recorded items, movement in cash flow heads, and reported tax expenses. The article also discusses the reasons for the difference in tax expenses and the development of deferred tax assets and liabilities.

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 shows the details about the recorded items by Cromwell
Property Group in their 2017 Consolidated Statement of Cash Flows:
Cash Flow from Operating Activities: Cromwell Property Group has reported some specific
items under the operating activities. They are payment and receipts from the course of business
operations, distribution received, interest received, finance cost payment and income tax
payment (cromwellpropertygroup.com 2018). The analysis of the cash flow statement shows that
receipts from the course of actions decreased in the year 2017 than the past year; and they are
$342 million in 2017 and $354.7 million in 2016. The reason for this decrease can be the
decrease in revenue for the company. On the contrary, Cromwell Property Group had increase
the payment for course of operation in 2017 than 2016 due to the increase in credit purchase;
they are $154.4 million in 2017 and $150.2 million in 2016. There is a decrease in the interest
received by Cromwell Property Group and they are $2.1 million in 2017 than $4.2 million in
2016 (cromwellpropertygroup.com 2018). Reduction in investment might be the reason for this.
In addition, Cromwell Property Group has received more distribution in 2017 from 2016; that is
$24.6 million from $8.7 million and increase in profit in the investment company can be the
reason for this. Cromwell Property Group was required to pay more finance cost in 2017 than
2016; that is $55.4 million than $54.8 million. Cromwell Property Group also had to increase the
payment for income tax as a result of increased profitability; that is $4.6 million in 2017 from
$3.5 million in 2016 (cromwellpropertygroup.com 2018).

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Cash Flow from Investing Activities: There are many items under investing activities for
Cromwell Property Group. Cromwell Property Group had to increase the investment for the
purchase of investment property and they are $139.3 million and $74.9 million in the years 2017
and 2016 respectively. At the same time, the company has received less proceeds from the sale
of these investment properties in the year 2017 (cromwellpropertygroup.com 2018). After that,
Cromwell Property Group has decreased the payment for equity investment in the year 2017; and
they are $17.9 million and $18.6 million in the year 2017 and 2016 respectively. Cromwell
Property Group has also reduced the payment for intangible assets in 2017 than the past year;
and they are $0.4 million in 2017 and $0.9 million in 2016. Cromwell Property Group had made
more purchase of property, plant and equipment in 2017 as compared to 2016; they are $1.3
million in 2017 from $0.7 million in 2016; and the objective of the company was to increase the
asset base of the business for more return from assets. In 2017, Cromwell Property Group
reduced the repayment for loans over the last year; they are $1.2 million and $12.6 million in the
years 2017 and 2016 respectively. In the year 2017, Cromwell Property Group has acquired the
disposal group for $145.6 million that was nil in the year 2016 (cromwellpropertygroup.com
2018).
Cash Flow from Financing Activities: This head of cash flow of Cromwell Property Group
also includes crucial items. In the year 2017, Cromwell Property Group has increased the
borrowings from the bank than the past year; that is $302.7 million in 2017 from $186.9 million
in 2016. Major capital requirement might be the reason for the same
(cromwellpropertygroup.com 2018). At the same time, Cromwell Property Group increased the
repayment of their loans in 2017 than 2016; that is $95.6 million than $79.8 million. Proceed
from the staple securities is a source of income for Cromwell Property Group and minor increase

3CORPORATE ACCOUNTING
in this income for Cromwell Property Group can be seen in 2017 as compared to 2016; that is
$1.1 million from $1 million. Increase in profit in 2017 contributed towards the increase in
dividend payment for the shareholders; that is $139.9 million from $130.9 million. There was not
any outflow related to the issue cost of equity in 2017 that was $0.1 million in 2016. $2.6 million
was the outflow for the company in 2017 for settling the derivative financial instrument and it
was nil in 2016 (cromwellpropertygroup.com 2018).
Requirement [ii]
The following figure shows the movement in the major heads of cash flow for Cromwell
Property Limited from 2015 to 2017:
2017 ($'M) 2016 ($'M) 2015 ($'M)
(250.0)
(200.0)
(150.0)
(100.0)
(50.0)
-
50.0
100.0
150.0
200.0
154.3 159.1 144.2
(189.7) (176.0)
(51.4)
59.9
(50.8)
(94.0)
Cash Flow from Operating
Activities
Cash Flowv from Investing
Activities
Cash Flow from Financing
Activities
Figure 1: Analysis of the Cash Flow Heads of Cromwell Property Group
(Source: cromwellpropertygroup.com 2018)

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The above figure indicates towards an increasing trend in the cash inflow from operating
activities from the year 2015 to 2016 of Cromwell Property Group. They are 144.2 million in
2015 and $159.1 million in 2016. The reasons that helped in setting this trend are increase in
receipts from the course of action. However, there was an increase in the payment of course of
action and decrease in the receipts that led to the decrease in this cash inflow in 2017 that is
$154.3 million (cromwellpropertygroup.com 2018).
The above figure indicates towards the presence of a continues increasing trends in the
cash outflow from investing activities for Cromwell Property Group; they are $51.4 million in
2015, $176 million in 2016 and $189.7 million in 2017. Increase in the payment for some aspects
like property, plant and equipment, borrowings, loans and others is the main reason that set this
increasing trend (cromwellpropertygroup.com 2018).
The above figure shows an improvement in the cash flow from financing activities for
Cromwell Property Group from 2015 to 2017; they are -$94 million in 2015, -$50.8 million in
2016 and $59.9 million in 2017. The main reasons for the improvement in cash flow for
Cromwell Property Group are the increase in the borrowings, proceeds from stapled securities
and others (cromwellpropertygroup.com 2018).
Other Comprehensive Income Statement
Requirement [iii]
The items reported in the 2017 Consolidated Statement of Comprehensive Income by
Cromwell Property Group as other comprehensive income items are Items that may be
reclassified to profit or losses, ‘Exchange differences on translation of foreign operations’ and
‘Income tax related to these items’ (cromwellpropertygroup.com 2018).

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Requirement [iv]
One of the major items in the other comprehensive income statement is the profit or loss
reclassification and it is an important tool to maintain the integrity of the profit or loss of the
companies. This aspect helps the users in gaining the correct information about the profit or loss
related financial transactions that take place in the financial year. Apart from this, the users can
compare the profit or loss of the companies in a better manner by this aspect (Ball et al. 2015).
The main role of exchange difference of the transactions of foreign operations is the
conversion of the currency of foreign subsidiary entity into the currency of the parent entity.
Business organizations become able in the conversion of the foreign currency into the parent
company currency at the time to the process of consolidation. In this process, the re-
measurement of the foreign currencies is done into the currency of the parent company so that
the profit or loss of the company can be converted into the currency of the parent company
(Chong, Chang and Tan 2014).
The above discussed two aspects are subject to taxation under the Australian taxation law
and thus, the companies are required to carry on the taxation operations on these two aspects. It
is required to show this taxation expenses in the other comprehensive income statement (Stice
and Stice 2013).
Requirement [v]
The users of the financial statements consider the other comprehensive income statement
a specific statement that provides a diversified view of the net income and comprehensive
income of the business organizations. On the other hand, the companies become able in
providing a diversified view of their profitability with the assistance of this statement. In this

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context, it needs to be mentioned that the items under the other comprehensive income statement
are not directly connected with the generation of profit. Thus, in the presence of all these reason,
these items are not included in the income statement or the profit or loss statement of the
organizations (Amorim 2014).
Accounting for Corporate Income Tax
Requirement [vi]
According to the regulations of Australian taxation law, it is required for Cromwell
Property Group to do their taxation as per the regulations of Australian Taxation Office. 30 per
cent is the applicable tax rate for Cromwell Property Group for the financial year 2017 and 2016.
From the analysis of the 2017 Annual Report, it can be observed that Cromwell Property Group
has reported $1.5 million for 2017 and $3.5 million for 2016 as the tax expenses
(cromwellpropertygroup.com 2018).
Requirement [vii]
The financial statements of Cromwell Property Group states that there is difference in the
tax expenses as per the applicable tax rate and the reported tax expenses; and some reasons can
be held responsible for this difference (cromwellpropertygroup.com 2018). The acquisition of
some business entities by the Cromwell Property Group trust is one of the reasons as this
acquisitions led to the adjustments with the taxation expenses. The impairment of fair value can
be considered as another major reason for creating the difference as this aspect contributed
towards the taxation adjustments under the tax reconciliation statements. Apart from this,
Cromwell Property Group adjusted the taxation expenses of previous year with the current year

7CORPORATE ACCOUNTING
taxation expenses that led to the difference in taxation expense (cromwellpropertygroup.com
2018).
Requirement [viii]
According to the 2017 financial statements of Cromwell Property Group, the reported
amount of deferred tax assets by the company are $3.4 million and $1.3 million for the year 2017
and 2016 respectively. Apart from this, the reported differed tax liabilities of Cromwell Property
Group for the year 2017 and 2016 are $0.9 million and $1.9 million respectively. In Cromwell
Property Group, there are some specific reason for the development of deferred tax assets and
liabilities (cromwellpropertygroup.com 2018). The difference in tax rate at the time to recover
the settlement of assets and liabilities is considered as the main reason for the development of
both the deferred tax assets and deferred tax liabilities in Cromwell Property Group. Some major
factors for the generation of deferred tax assets are transaction costs, employee benefits,
recognition of taxation loss, various investment schemes and others. On the other hand, the
management’s right for intangible assets is the main reason for deferred tax liabilities (Rimmer,
Smith and Wende 2014).
Requirement [ix]
Cromwell Property Group has reported $1.2 million and $1.7 million as current tax assets
for the year 2017 and 2016 respectively. On the other hand, the company has recorded $1.7
million and 2.2 million as the current tax liability of the company for the year 2017 and 2016
respectively (cromwellpropertygroup.com 2018). Companies use to report the income tax
expenses for the current year in the income statement that is payable in the next year. At the
same time, income tax payable refers to the tax expenses that companies are required to pay as

8CORPORATE ACCOUNTING
they did not pay the whole amount of taxable expenses for the last year. This aspect creates the
difference (Alexander 2013).
Requirement [x]
Cromwell Property Group has reported $1.5 million for 2017 and $3.5 million for 2016
as the tax expenses in the income statement where $4.6 million for 2017 and 3.5 million for 2016
are the tax expenses for the company in the statement of cash flow (cromwellpropertygroup.com
2018). Thus, difference can be seen. The income tax expenses in income statement are the
income tax payable for the current year and it is required to be paid in the next financial year.
However, the cash flow statement shows the payment of income tax for the current year and it
can be income tax payable for the last year or the advance payment of income tax. This aspect
creates the difference (Richardson 2015).
Requirement [xi]
It needs to be mentioned that Cromwell Property Group has carried out their taxation
expenses in the most interesting way by complying with all the required standards of Australian
taxation. At the same time, the company has provided the taxation notes to the financial
statement that include all the required clarification and justifications of taxation treatment of the
company. For this reason, there is not anything confusing or surprising in the taxation treatment
of Cromwell Property Group. By observing the taxation treatment of Cromwell Property Group,
one can get effective insight about the taxation treatment done by the large organizations.

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References
Alexander, R.M., 2013. Tax transparency. Business Horizons, 56(5), pp.543-549.
Amorim, C.F., 2014. Reporting comprehensive income: Evidence from Portuguese listed
companies (Doctoral dissertation, NSBE-UNL).
Ball, R., Gerakos, J., Linnainmaa, J.T. and Nikolaev, V.V., 2015. Deflating profitability. Journal
of Financial Economics, 117(2), pp.225-248.
Chong, L.L., Chang, X.J. and Tan, S.H., 2014. Determinants of corporate foreign exchange risk
hedging. Managerial Finance, 40(2), pp.176-188.
Cromwellpropertygroup.com. (2018). [online] Available at:
https://www.cromwellpropertygroup.com/__data/assets/pdf_file/0015/22920/CMW-2017-
Annual-Report-final-web.pdf [Accessed 24 May 2018].
Cromwellpropertygroup.com. (2018). [online] Available at:
https://www.cromwellpropertygroup.com/__data/assets/pdf_file/0023/22919/
AnnualReport_CMW_2016.pdf [Accessed 24 May 2018].
Cromwellpropertygroup.com. (2018). [online] Available at:
https://www.cromwellpropertygroup.com/__data/assets/pdf_file/0022/22918/
AnnualReport_CMW_2015.pdf [Accessed 24 May 2018]
Richardson, D., 2015. Company tax cuts: an Australian gift to the US internal revenue
service. TAI Briefing Paper.

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Rimmer, X., Smith, J. and Wende, S., 2014. The incidence of company tax in
Australia. Economic Round-up, (1), p.33.
Stice, E.K. and Stice, J.D., 2013. Intermediate accounting. Cengage Learning.