Corporate Accounting: Financial Statements Analysis of Telstra and TPG Telecom Limited

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of the Student:
Name of the University:
Authors Note:

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CORPORATE ACCOUNTING
Executive Summary:
Financial reports are prepared by entities and organizations operating in Australia to
comply with the requirements of Corporations Act, 2001 (the act). In Australia, the corporations
and entities established under the act must abide by the rules and regulations enumerated in
different sections of the act to avoid penalty. Australian Securities Exchange is the largest
exchange in the country that has shares of different companies, not only from the country but
across the globe, listed in its index. The primary objective of this document is to discuss about
different elements of financial statements of entities enlisted in Australian Securities Exchange.

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CORPORATE ACCOUNTING
Contents
Executive Summary:........................................................................................................................1
Introduction:....................................................................................................................................3
Owners’ equity:...............................................................................................................................3
Analysis of cash flow statements of two companies:......................................................................8
Other Comprehensive Income Statement analysis:.......................................................................12
Corporate Income Tax Accounting:..............................................................................................16
Conclusion:....................................................................................................................................21
References:....................................................................................................................................22

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CORPORATE ACCOUNTING
Introduction:
The two chosen entities for this purpose are Telstra Corporations and TPG Telecom
Limited. A brief introduction about the two entities shall provide a frame of reference to the
readers of the document while evaluating the details about these two companies.
Telstra Corporation Limited (Telstra): Telstra Corporation builds telecommunication networks
and operates these networks to provide top quality telecommunication services to the citizens of
the country. Apart from Australia the country also has its operations extended to different parts
of the world. The company, founded in 1975, has it’s headquarter in Melbourne, Australia.
TPG Telecom Limited (TPG): A giant in Telecommunication industry in Australia, TPG
specializes in internet and mobile telecommunication services. In internet service providing
market TPG has the second largest market share. The company also has the distinction of
running and operating largest mobile virtual network in the country. Initially the company was
founded as Total Peripherals Group in 1986. Registered head office of the company is situated at
New South Wales, Australia.
Taking into consideration the profiles of the two entities selected for the exercise in this
document, let us now get into a detailed discussion about various elements of financial
statements of these two companies.
Owners’ equity:
TPG Limited:
Owners’ equity section of TPG shows the following items:

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CORPORATE ACCOUNTING
Share capital: It is the face value received from issue of shares of the company. This amount
represent the proportionate right of shareholders in the total ownership of the company (Dhaliwal
et. al. 2014).
Reserves: The combined balance of foreign currency translation reserve, share based payments
reserve, fair value reserve and cash flow hedge reserve is shown in the amount of reserve. Thus,
these are all specific reserves and cannot be used for any other purpose different from te specific
reasons for creation of each reserve (Juárez, 2015).
Retained earnings: The amount of retained earnings is the accumulated balance of profit and loss
account that have left after declaring dividend from profits attributable to equity shareholders
over the years.
Non-controlling interests: It is the amount that represent the equity of minority interests of the
company.
Changes in the amount of equity shown in the table below:
TPG Limited
Amounts are in $ million 31st July, 2017 31st July, 2016 Change % Change
Share capital 1,449.40 1,051.90 397.50 37.79
Reserves (18.10) 41.20 (59.30) (143.93)
Retained earnings 963.30 681.00 282.30 41.45
Equity shareholders' fund 2,394.60 1,774.10 620.50 34.98

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CORPORATE ACCOUNTING
Non-controlling interests 4.70 5.10 (0.40) (7.84
)
Equity in total 2,399.30 1,779.20 620.10 34.85
The increase in share capital is due to issue of additional shares to the public by TPG Telecom
Limited. The change in reserves amount to negative balance at the end of July 31, 2017 is due to
the huge loss that the company incurred in the year. The retained earnings balance has reduced in
the year because payment of dividend (Lebedeva et. al. 2016).
Telstra Corporation Limited:
In case of owners’ equity of Telstra there is absolutely no difference between the items of
equity as reported by TPG. Thus, Telstra also showed the balances of share capital, reserves,
retained earnings and non-controlling interests. As already a brief discussion about their nature
and characters have been made thus, it is not necessary to explain what these elements represent
in financial statements (Karadag, 2015). However, the changes in the amounts over the previous
year can be analysed below.
Telstra Corporation Limited
Amounts are in $ million 31st
Junly, 2017
31st
July, 2016
C
hange %
Change
Share capital