Australian Accounting Standards and Tax

This solved assignment delves into the intersection of Australian accounting standards (AASB) and taxation. It examines how AASB influences tax reporting, discusses the value relevance of deferred tax assets, and analyzes the impact of international financial reporting standards (IFRS) adoption on Australia's tax landscape. The document also explores case studies and real-world examples to illustrate the practical implications of these concepts.

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

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Table of Contents
Solution to Question i.................................................................................................................2
Answer to Question ii.................................................................................................................3
Answer to Question iii...............................................................................................................4
Solution to Question iv...............................................................................................................7
Answer to Question v:................................................................................................................8
Solution to Question vi...............................................................................................................9
Solution to Question vii...........................................................................................................10
References................................................................................................................................11

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Solution to Question i
List of items of equity
The annual report of the firm BSA limited reflects the fact that the equity of the firm consists
of the items issued capital, reserves, profit reserve as well as accumulated losses. The issued
capital stands at $97592000 during 2016 and has the remained the same as compared to 2015.
The item “reserves” listed under equity of BSA Limited is recorded to be $1410000 for both
the year 2015 and 2016. The accumulated losses of the firm are recorded to be ($63024000)
while it increased to ($65243000). There are important items that are positioned under issued
capital are necessarily ordinary shares that a specific corporation issues, together with
specified costs that are associated to share issue plus income tax linked share issue (Tran,
2015). According to the balance sheet statement of the corporation BSA Limited, there are
four different items that are clubbed under the equity items namely the issued capital,
reserves, accumulated losses and the profit reserve of the firm. According to the annual report
of the corporation, the issued capital can be witnessed to be $97592000 during the financial
year 2016 in comparison to the figure registered to be $97592000 during the financial year
2015. Further, under the concept of financial accounting, principally reserves can be
considered as a specific component of equity of the firm BSA Limited. For itself, it can be
indicated as a supplementary amount besides fundamental capital share. The yearly
pronouncement of BSA shows that reserves stand at $1410000 in comparison to figure
documented year ago and that was equal to $1410000. Again, the consequent item stated
under the head equity of the corporation BSA Limited is essentially retained income.
Fundamentally, this stands for the overall profit/losses of the firm mainly enumerated since
the time of arrangement reduced by the dividend pay-out to firm’s shareholders (Tran, 2015).

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Answer to Question ii
Several categories of expends are incurred by corporations that comprises of selling expends
and administrative expends. In essence, one of these types of expenditures include tax
expends. The financial statement of the firm reflects loss of amount $ (3014000) incurred
from continuing actions from particularly income tax. In addition, tax expends can be
considered as a major responsibility of the business concern owing to the federal, state along
with municipal governing bodies of the country. The calculation of tax expends is executed
by the multiplying the suitable tax of the corporation by the company’s earnings before taxes
after specifically factoring specific components namely non-deductible accounts, tax
assets/liabilities (Tran, 2015). Fundamentally, there subsists no exception even in case of the
business concern BSA Limited since the business concern incurs certain tax expends. As per
the rules of the Australian taxation regulations, the corporate tax rate for specifically
Australian corporations is approximately 30%. Based on the tax rate of approximately 30%,
the entire tax expenditure of the corporation BSA Limited is around $795000 recorded during
the financial year 2016. In essence, this can be regarded to be main tax expenditure of the
corporation for 2016. Nonetheless, this can be hereby observed that there has been decline in
the tax expenditure on the whole due to the reduction in overall income of the firm during the
year 2016 in comparison to the year 2015.
Answer to Question iii
It can be hereby stated that the business corporation BSA Limited has recorded a loss
amounting to $3014000 during the financial year 2016. Nevertheless, profit was registered to
be around $5449000 during the financial 2015. The financial statement replicates the overall
advantage for a specified time period that can again be reconciled and has documented a
loss/profit from continuing operations of the firm (Bentwood & Lee, 2012). However, that

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can be seen to be at ($3014000) in 2016 whereas it was documented to be ($5439000) in
2015. In addition to this, the annual report of the corporation states that the income tax
expenditure of the corporation calculated at the rate 30% during the financial year 2016.
Essentially using 30% tax rate, the overall income tax expenditure of the firm BSA Limited
stands at ($904000) during the financial year 2016 and around $1632 during the financial
year 2015.
Principally, there are certain specified items that can be incorporated or barred from the
expenditure on tax at initial period. In actual fact, BSA Limited’s income tax expenditure
calculated at the specific rate of 30% amounts to ($904000) during the year 2016 in
comparison to the year ago figure registered to be $1632000. Furthermore, a distinct variation
in the tax expend of the firm can be witnessed in the annual financial statement of the
business concern (Hanlon et al., 2014). The specified financial items can be considered as the
causes of differences in the overall tax expenditure. In particular, in this present case of BSA
Limited, there subsist diverse financial items that have additional influence on the overall tax
expenditure of the firm. According to the yearly pecuniary reports of the firm, the most
important item is particularly the non-deductible expends that again can be evaluated for
determining taxable gains. In essence, the item that has the need to be appropriately adjusted
is the allowance for firm’s research and development (R&D) (Jin et al., 2015). In addition to
this, adjustments can also be identified in the period in association to the present tax of
previous years and this necessarily stands at ($29000) during the year 2016 and ($18000)
during the year 2015. Evaluation of the financial assertions of the corporation thus reflects
the overall income tax otherwise expends recognized during the current years related to
continuing operations that essentially remains at ($766000), whilst the same is recorded to be
$1546000 during the financial year 2015.

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Answer iv
As rightly put forward by Burkhauser et al., (2015), firm’s tax assets otherwise liabilities
(indicating the deferred) can be referred to as key themes of the tax procedure of business
concerns. Nevertheless, corporations BSA Limited, it can be stated corporation’s tax asset of
the firm that is the deferred ones stands at $7795000 in 2016. In addition to this, taxable
variances correlated to firm’s investments can be observed mainly in joint ventures.
Burkhauser et al., (2015) suggests that deferred tax assets refer to a particular circumstance in
which the companies pay out taxes in advance that is calculated on firm’s particular financial
assets. In addition to this, contrarily, income tax liabilities (deferred) replicate a particular
state where differences can be witnessed in specifically firm’s profit and tax carrying value of
corporations. As per accounting regulations and associated accounting treatment rules there
are specified causes for enhancement of tax, firm’s assets otherwise liabilities (referring to
the deferred ones). Consequently, excess pay off for depreciation along with taxable rate of
depreciation, the firm BSA Limited shall certainly not have to make disbursements for
supplementary tax in the following year. Therefore, this can be considered as an asset.
Nevertheless, for tax assets of BSA Limited (deferred), variation in depreciation plus tax rate
associated might possibly lead to surplus pay-out (Richardson et al., 2015). The surplus pay
out for depreciation is primarily owing to variation in depreciation along with tax rate
associated to depreciation. Due to deferred tax liabilities of corporation, this might have
occurred that owing to temporary differences in profits of the firm, the firm had the need to
provide less payment for calculated taxes in the current period (Badenhorst & Ferreira, 2016).
Thus, it is imperative for the firm to make payments in the following years.

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Answer v:
Present tax asset otherwise income tax that is necessarily payable can be considered as a
significant feature of the business concern. As per the annual report of the firm BSA limited,
the business concern has explained as regards the present tax assets. According to the
financial pronouncements of the corporation BSA Limited, It can thus be mentioned that the
firm has not yet pronounced any specific amount for specifically the current tax assets during
FY 2016. Nonetheless, in the year 2016, the company registered $795000 as corporation’s tax
assets (deferred) in FY 2016 and $1546000 in the FY2015.
Subsistence of a fundamental variance in income tax pay-out plus income tax that BSA needs
to disburse can be observed. However, the particular cause behind that might be the existence
of the specified gap (King, 2016). The subsistence of firm’s tax assets (referring to deferred)
might be cited as the probable reason. In itself, variances that exist between rules stipulated
for managerial accounting and rules of treatment of firm’s taxes can also be stated as the
fuelling reason of this observed aspect. However, there are several examples in which
business concern pays off additional amount of tax assets as compared to tax assets (deferred)
that subsequently lead to the difference. In this case, the example of depreciation can be
mentioned. Differences for particularly depreciation can necessarily be witnessed under the
context of financial accounting as well as tax accounting for different rate of depreciation
(Taylor & Richardson, 2014). Hence, the entire amount of depreciation that is payable can
one hand be augmented and on the other hand be lessened.
Answer vi
The corporation under consideration BSA Limited essentially pays out tax as can be observed
from firm’s income declaration and cash flow pronouncements. According to the income
statement, the firm replicates the whole amount of tax expenditure utilizing tax rate of

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specifically 30% on the profit gained from different continuing operations. In essence, firm’s
income tax expends replicate the entire sum of the payable present tax along with the
deferred tax (Detzen et al., 2016). Essentially, the tax amount that the firm has the need to
pay depends on generated taxable profit for specified time. However, it can be observed in
the given case that the taxable profit is different from the gains and this can be seen in the
profit/loss pronouncement of the firm. Particularly, this is due to diverse items of income in
addition to expends that are essentially taxable or else deductible in specific time periods
together with diverse other items that are not taxable else wise deductible. Thus, tax
expenditure is said to be mentioned under BSA’s flow of cash from different functioning.
Particularly, under this specific division of cash flow, specific items of firm’s income
assertion are treated in a different manner. This necessarily means that specific alterations
take place in current assets/liabilities of the corporation (Jones, 2017). According to the cash
flow statement of the firm, specific reductions in particular components of tax expenditure
has been stated that indicates towards cash utilization. Particularly, this refers to the fact that
certain elements of tax expenditure have been closed before considering consolidated
statement. It is due to this reason; differences on tax expenditure can be witnessed in the
income statement along with cash flow statement.

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Answer to vii
The company BSA Limited has implemented and executed the process by sticking to the
pertinent regulations along with stipulations of particularly Australian Taxation Regulation.
Furthermore, the company BSA Limited has arranged and presented all the requisite
explanations along with rationalizations of diverse taxation issues namely tax rate, different
deferred tax assets/liabilities along with the present taxation accountabilities. Tax accounting
system as can be observed from the annual report of the firm helps in mentioning that there
lie no doubt or confusion in the scheme of tax accounting (Cardwell, 2015). Nevertheless,
there also exist certain important factors in the process of treatment of taxation of the firm
BSA Limited. According to the annual pecuniary declarations of the firm BSA Limited,
income tax expends represent the entire sum of the tax payable in the present period in
addition to deferred tax. However, for the present tax that is necessarily payable by the
corporation is primarily based on the enumerated taxable profit for a specific year.
Nonetheless, the taxable profit varies as has been reflected in the consolidated statement of
the business entity, mainly profit/loss along with comprehensive earning due to diverse
income items as well as expenditures that are essentially taxable or else deductible (Belz et
al., 2016). Basically, the deferred tax is essentially registered on the temporary differences
that subsist between carrying amounts of specifically asset/liabilities reflected in the
consolidated financial declarations. Tax assets otherwise liabilities (referring to the deferred
ones) can necessarily be associated to BSA Limited’s employee benefits. In addition to this,
this can be recognized and enumerated according to rules mentioned under AASB 112 for
enumeration of firm’s taxes as well as AASB 119 for presentation of benefits made available
to employees (Aasb.gov.au., 2018).

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References
Australian Accounting Standards Board (AASB) - Home. (2018). Aasb.gov.au. Retrieved 24
January 2018, from http://www.aasb.gov.au/
Badenhorst, W. M., & Ferreira, P. H. (2016). The Financial Crisis and the Value‐relevance of
Recognised Deferred Tax Assets. Australian Accounting Review, 26(3), 291-300.
Belz, T., von Hagen, D., & Steffens, C. (2016). Taxes and firm size: political cost or political
power?.
Bentwood, S., & Lee, P. (2012). Benchmark management during Australia's transition to
international accounting standards. Abacus, 48(1), 59-85.
Burkhauser, R. V., Hahn, M. H., & Wilkins, R. (2015). Measuring top incomes using tax
record data: A cautionary tale from Australia. The Journal of Economic Inequality, 13(2),
181-205.
Burkhauser, R. V., Hahn, M. H., & Wilkins, R. (2015). Measuring top incomes using tax
record data: A cautionary tale from Australia. The Journal of Economic Inequality, 13(2),
181-205.
Cardwell, J. (2015). Alternative assets insights: A new tax system for managed investment
trusts. Taxation in Australia, 50(1), 46.
Detzen, D., Stork genannt Wersborg, T., & Zülch, H. (2016). Impairment of Goodwill and
Deferred Taxes Under IFRS. Australian Accounting Review, 26(3), 301-311.
Hanlon, D., Navissi, F., & Soepriyanto, G. (2014). The value relevance of deferred tax
attributed to asset revaluations. Journal of Contemporary Accounting & Economics, 10(2),
87-99.

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Jin, K., Shan, Y., & Taylor, S. (2015). Matching between revenues and expenses and the
adoption of International Financial Reporting Standards. Pacific-Basin Finance Journal, 35,
90-107.
Jones, D. (2017). Mid market focus: Income or capital?: Taxpayer draws a blank. Taxation in
Australia, 51(7), 357.
King, A. (2016). Mid market focus: The new attribution tax regime for MITs: Part
1. Taxation in Australia, 50(10), 590.
Richardson, G., Taylor, G., & Lanis, R. (2015). The impact of financial distress on corporate
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Taylor, G., & Richardson, G. (2014). Incentives for corporate tax planning and reporting:
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Economics, 10(1), 1-15.
Tran, A. (2015). Can Taxable Income Be Estimated from Financial Reports of Listed
Companies in Australia. Austl. Tax F., 30, 569.