Corporate Accounting: Cash Flows, Comprehensive Income, Taxation

This document delves into the intricacies of cash flow statements, comprehensive income statements, and corporate income tax accounting. It discusses the importance of each aspect, provides examples, and highlights the key considerations for financial reporting.

HI5020 Corporate Accounting
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Table of Contents
CASH FLOWS STATEMENT.......................................................................................................3
(i)..................................................................................................................................................3
(ii)................................................................................................................................................3
OTHER COMPREHENSIVE INCOME STATEMENT................................................................4
(iii)...............................................................................................................................................4
(iv)................................................................................................................................................5
(v).................................................................................................................................................5
ACCOUNTING FOR CORPORATE INCOME TAX...................................................................5
(vi)................................................................................................................................................5
(vii)..............................................................................................................................................6
(viii).............................................................................................................................................6
(ix)................................................................................................................................................6
(x).................................................................................................................................................7
(xi)................................................................................................................................................7
References........................................................................................................................................8
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CASH FLOWS STATEMENT
(i)
The cash flow in the company is required to be made in all the companies so that the transactions
and the vents which involve the use of the cash can be identified in a separate manner. All of
them will be recorded in this. The main items which are included in this and are incorporated in
the Elders limited are as follows:
 The company is carrying out various operations and for them, the cash which has been
paid and received is recorded in the cash flow statements. There are the sales which are
made and for that, it is required that the receipts from them are included which amounts
to 5353329 in 2015 and then increased to 6434915 in 2016 and then 7104407 in 2017
(Elders Limited, 2017).
 The payments are also made in the company to all the employees and the suppliers and
they will be included. The amount of them is 6377688 in 2016 and then 7017838 in 2017.
 The receipt of the dividend has been made and also the payments are made in relation to
the interest cost which is paid on the borrowings of the company. Cash is also paid in
relation to the income tax and that amounts to 3467 for the current year.
 Investing activities also involve various items such as the purchase of the plant and other
assets and then equity investment is also made which is to be included in the same.
Payments are made for intangibles and also proceeds are there for the sale of the
intangibles and other proceeds which make the total balance from this as -6054 in 2015
which they reached to -27292 for 2016andin 2017 it was 42011 (Elders Limited, 2017).
 The financial activities are undertaken and in that, all the issue of the shares and the cost
which is incurred on them have been taken into consideration. Then the cash flow related
to the borrowings is considered and also the hybrid equity transactions and dividends.
(ii)
The comparison among all of the three classes of the cash flows will be required to be made and
the classification which is made is as follows:
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Operating activities: The operations which are performed by the company in the business will
be covered in this and all of the items will be included in the statements for which the payment
has been made in cash.
Investing activities: The investments which are made by the elements limited in the year and for
which the payments and receipt are also carried in cash will have to be incorporated in this.
Financing activities: The main items to be included in this are related to the borrowings and
equity. The company will be required to make the appropriate disclosure of all of them in the
cash flow statements.
The company will be required to make the various decisions on the basis of this and due to it, the
comparison will have to be made. The table which is provided below can be used in this respect
and proper evaluation will be made.
Particulars 2015 2016 2017 Chang
e 2015-
2016
change
2016-
2017
Change
2015-
2017
Cash flow from operating
activity
-5278 48676 81599 53954 32923 86877
Cash flow from investing
activity
-6054 -27292 -42011 -21238 -14719 -35957
Cash flow from financing
activity
-10476 13098 -39533 23574 -52631 -29057
The data which is related to the past three years is presented below and on the basis of the
comparison will be made as the increase and decrease which are taking place are being
identified. On the basis of them there will be proper changes which will be made for the future.
OTHER COMPREHENSIVE INCOME STATEMENT
(iii)
In the company, there are various items which are included in the statement of the
comprehensive income and this is because they are not included in the income statement. They
have not been realized in the year and so it is not possible to include it in the earning of the
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company for that year. They will have to be shown in the separate manner for which this
statement is made.
(iv)
In this, there are various events which can be included and there are some of the common items
which will be considered. They are hedge related transactions, foreign exchange difference and
some of the others are also included. In the given case the company is not having much of the
items which are there. The exchange difference which arises on the foreign operations is taken
into consideration in this. There is the positive balance of this in 2015 which amounts to 564 and
then the loss was made in this which is 818 in the 2016 and 1211 for the current 2017 (Elders
Limited, 2017).
(v)
The company is not including them in the income statement as they will be the ones which will
be realized in the coming period and not in the current period. There is the requirement in the
accounts that only the ones which have been realized are included in the income statement and
due to that the items which will be realized in the coming period are recorded in the
comprehensive statements and they will be transferred when they will be earned or paid by the
company in actual terms. By the help of them, it will be possible for the company to make the
appropriate disclosure in the accounts which will be helpful for all the investors as they will be
using the information that is present in them in the process of making of the decisions.
ACCOUNTING FOR CORPORATE INCOME TAX
(vi)
The income tax act which is to be followed in every company requires that there shall be proper
provisions which are to be followed in relation to the income and the tax which will be paid in
relation to them. For that, it is required that the earnings shall be calculated inappropriate
manner. After this, all the laws which are specified shall be followed and according to them, the
tax will be paid which shall be identified as the expenses in the income statement. In the current
case the tax benefit was there with the company in the past year which is in 2016 and that was of
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19403 (Elders Limited, 2016). Then in the current year the expense has been recognised in this
respect and that is for the amount of 4137.
(vii)
The tax which has been recognised in the income statements and the tax in accordance with the
act is different and there are the deviations due to the various aspects. The rates at which the
calculations are made in both are not similar. The tax in the act is calculated at 30% and with that
the amount which is ascertained for the tax is 37144 but then in this the adjustments are made in
which the items which are not deductible and also the items which are related to the previous
year’s current tax are made (Elders Limited, 2017). The losses which were not recognised earlier
are also considered in this and by the inclusion of all of them the variation in the amount of the
tax is arising.
(viii)
The company is required to have the knowledge of the entire elements which are included in the
tax amount. The total value is divided in two categories which are current tax and the deferred
tax. The tax which is related to the current period will be current tax and the amount of tax which
arises due to the timing difference is taken as the deferred tax. Company is required to identify
that and, make the proper recognition of the same in the balance sheet. They will be adjusted in
the coming period. In the given case also there deferred tax assets which have been identified by
the company. They are the assets and so are to be disclosed in asset section. The amount which is
determined in this respect is 64126 in the 2016 and then for the 2017 this has reduced to 59382.
They will be treated by the company for the tax calculations in the future period and will have to
be adjusted (Elders Limited, 2017).
(ix)
The tax payable is the amount which is included in the balance sheet and this is the current
liability for the company which will have to be met by the business in the coming one year. In
the given case of Elders limited also there is the amount which had been recognised in this
respect. There was no payable for the year 2015 and there is the current tax asset in this year
which amounts to 197. After that the company has identified the tax payable which will have to
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be paid and that amounted to 1090 and 109 for the year 2016 and 2017 respectively. This is
different from that of the tax expense as the whole amount of the tax is not paid in the one year
only and so the deviation in this amount arises (Elders Limited, 2017).
(x)
The tax which is paid by the company is identified in the cash flow statement and that is different
from the expense which is recognised by the company in the current year and the other years.
The expenses which are determined are not paid by the company fully in cash and due to that this
difference arises. The amount which is paid by the company in the current year for the tax is
1540 for the year 2016 and 3467 in 2017 (Elders Limited, 2017).
(xi)
The company is following all the laws which are been formulated in this respect and this shows
that all of the laws’ are compiled by the company. The company is having the subsidiaries and so
there is the formulation of the group for the purpose if tax consolidation in the group. All of the
liabilities which are arising in the tax will be allocated among all the members of this group in
the appropriate manner. The amount which is related to this will not be including in the financial
statements of the company (Elders Limited, 2017). All of the elements which are related to the
tax have been disclosed by the company in a proper manner and this ensures that the true and for
aa picture of the company has been represented by the accounts which are formulated and this
will help all of the various other parties that use the financial statements.
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References
 Bhandari, S. B., & Adams, M. T. (2017). On the Definition, Measurement, and Use of the
Free Cash Flow Concept in Financial Reporting and Analysis: A Review and
Recommendations. Journal of Accounting and Finance, 17(1), 11-19.
 Elders Limited. (2016). Annual report. [Online]. Elders Limited. Available at:
http://investors.elderslimited.com/FormBuilder/_Resource/_module/hmGBziN_d0SZypG-
M7oDFg/docs/Annual-Reports/2016-Annual-Report.pdf. [Accessed: 26 May 2018]
 Elders Limited. (2017). Annual report. [Online]. Elders limited. Available at:
http://investors.elderslimited.com/FormBuilder/_Resource/_module/hmGBziN_d0SZypG-
M7oDFg/docs/Annual-Reports/Elders_2016_17_Annual_Report_Digital_1511.pdf.
[Accessed: 26 May 2018]
 Gobetti, S. W., & Orair, R. O. (2017). Taxation and distribution of income in Brazil: new
evidence from personal income tax data. Revista de Economia Política, 37(2), 267-286.
 Graham, J. R., Raedy, J. S., & Shackelford, D. A. (2012). Research in accounting for income
taxes. Journal of Accounting and Economics, 53(1), 412-434.
 Wang, Y., Butterfield, S., & Campbell, M. (2016). Deferred Tax Items As Earnings
Management Indicators. International Management Review, 12(2), 37.
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