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OPERATING, INVESTING AND FINANCING ACTIVITIES: THE BHP BIllition Company Corporate Accounting Deferred Tax Analysis

   

Added on  2021-06-16

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BHP BILLITION COMPANYCorporate AccountingDeferred Tax analysisName of the Author

Table of ContentsINTRODUCTION......................................................................................................................1ANSWER TO QUESTION NO- 1............................................................................................1ANALYSING INFORMATION PRESENT IN CASH FLOW STATEMENT.......................1ANSWER TO QUESTION NO- 2............................................................................................1OPERATING, INVESTING AND FINANCING ACTIVITIES: A SUMMARISEDEXPLAINATION......................................................................................................................1ANSWER TO QUESTION NO- 3............................................................................................2ITEMS REPORTED IN OTHER COMPREHENSIVE INCOME STATEMENT..................2ANSWER TO QUESTION NO- (iv).........................................................................................2UNDERSTANDING OF EACH ITEM REPORTED IN OTHER COMPREHENSIVEINCOME STATEMENT...........................................................................................................2ANSWER TO QUESTION NO- (v)..........................................................................................3REASON OF NON-REPORTING OF THESE ITEMS IN STATEMENT OF PROFIT ANDLOSS..........................................................................................................................................3ANSWER TO QUESTION NO- (vi).........................................................................................3TAX EXPENSE OF BHP BILLITON.......................................................................................3ANSWER TO QUESTION NO- (vii)........................................................................................3IS THE FIGURE OF TAX EXPENSE SAME AS ACCOUNTING INCOME MULTIPLIEDBY BHP BILLITON’S EFFECTIVE TAX RATE?..................................................................3ANSWER TO QUESTION NO- (viii)......................................................................................4COMMENT ON DEFERRED TAX ASSET OR LIABILITY.................................................4

ANSWER TO QUESTION NO- (ix).........................................................................................4IS CURRENT TAX ASSET SAME AS INCOME TAX EXPENSE?......................................4ANSWER TO QUESTION NO- (x)..........................................................................................5IS THE INCOME TAX EXPENSE SAME AS INCOME TAX PAID?...................................5ANSWER TO QUESTION NO- (xi).........................................................................................5

INTRODUCTIONThe success of an organisation depends on its financial working. The picture of thefinancial working is important to be shown to the public and is to be viewed by themanagement. Management is responsible for improving the efficiency of company’s financialstrength. For this the managers are required to have a complete insight of the company’saccounts, so that the company can achieve the organisational goals. Only gathering offinancial accounts is not necessary, the management needs to analyse the different financialinformation in order to trace conclusions and formulate steps towards achievement of goals.The company used in this report for breaking down the financial information and analysingthe information is BHP Billiton, having its headquarters in Melbourne, Australia. Thiscompany is into the business of natural resources (iron, steel, copper, silver, aluminium etc.)and is one of the world’s largest mining companies. Along with it have interests inengineering and transportation (Gao, Givoly, and Laux, 2015).ANSWER TO QUESTION NO- 1ANALYSING INFORMATION PRESENT IN CASH FLOW STATEMENTThe reason of preparing the cash flow statement is to understand the cash movementsprevailing in the business, as the income statement is prepared on accrual basis. So, itbecomes difficult to understand that whether the incomes that are reported have been actuallyreceived or not, and whether the expenses shown are actually paid or not. Cash flowstatement shows the movement of cash without giving any regards to the year of accrual. Anytransaction that reported cash inflow or outflow is reported (Wang, Butterfield, andCampbell, 2016).From the cash flow statement available of BHP Billiton, the operations of the entity seem tobe at boom. The cash generated from operations have raised together with the dividendsreceived. Along with the receipt part the expenses like net interest, net taxation etc. havetaken an ascending side too. The dividends received had been US$ 636 million in financialyear 2017 as compared to US $ 301 million in financial year 2016. The company has reducedits expenditure in property plant and equipment from US$ 6946 million in financial year 2016to US$ 4252 in financial year 2017. The number of dividends paid has also been reduced

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