Corporate Accounting

The report intends to state on the various types of finding based on cash flow assessment of “Telstra corporations Ltd.” Some of the main assessment of the study has included a comparative analysis of three important aspects of cash flows specifically stated with operating, investing and financing events. It is also discussed on the various changes over the past three years based on the categorisation of information. The second section of the report have shown the elements from other comprehensive income statement and items which are not reported in the “profit and loss statement” or “income statement” of the company. The third section of the study have shown the expense of the formats for latest financial statement and included various other depictions on corporate income tax including the items which are not reported in the PL statement or income statement of the company. These interpretations are further followed with accounting for corporate income tax. This is done based on the depictions of firm’s tax expense as for the latest financial statement. Additionally, the report has shown that deferred tax assets and liabilities along with possible reason for recording the same. The last section of the report has depicted with the firm’s tax expense as per company tax rate times firms accounting income has been presented

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

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Table of Contents
Introduction......................................................................................................................................2
Cash flow statement:........................................................................................................................2
Requirement (i):...........................................................................................................................2
Requirement (ii):..........................................................................................................................6
Other comprehensive income statement:.........................................................................................8
Requirement (iii):.........................................................................................................................8
Requirement (iv):.........................................................................................................................8
Requirement (v):..........................................................................................................................8
Accounting for corporate income tax:.............................................................................................9
Requirement (vi):.........................................................................................................................9
Requirement (vii):........................................................................................................................9
Requirement (viii):.......................................................................................................................9
Requirement (ix):.........................................................................................................................9
Requirement (x):........................................................................................................................10
Requirement (xi):.......................................................................................................................11
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

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Introduction
The report intends to state on the various types of finding based on cash flow assessment
of “Telstra corporations Ltd.” Some of the main assessment of the study has included a
comparative analysis of three important aspects of cash flows specifically stated with operating,
investing and financing events. It is also discussed on the various changes over the past three
years based on the categorisation of information. The second section of the report have shown
the elements from other comprehensive income statement and items which are not reported in the
“profit and loss statement” or “income statement” of the company. The third section of the study
have shown the expense of the formats for latest financial statement and included various other
depictions on corporate income tax including the items which are not reported in the PL
statement or income statement of the company. These interpretations are further followed with
accounting for corporate income tax. This is done based on the depictions of firm’s tax expense
as for the latest financial statement. Additionally, the report has shown that deferred tax assets
and liabilities along with possible reason for recording the same. The last section of the report
has depicted with the firm’s tax expense as per company tax rate times firms accounting income
has been presented
Cash flow statement:
Requirement (i):
The important analysis on cash flow statement for this report has been prepared with
“Telstra Corporation Ltd”, which is one of the leading communications and technology company
in Australia known for “offering full range of communications services and competing in all

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telecommunications markets” (Telstra.com.au 2018). The main segregation of the “cash flow
statement” for the company has been done based on “operating activities, investing activities and
financing activities” (Schaltegger, Etxeberria & Ortas, 2017).
Cash flows from operating activities:
Some of the main consideration of the items under cash from operating activities have
included the “Receipts from customers”, “Payments to suppliers and employees (Inclusive of
GST)”, “Government grants received”, “Net placement of deposits by Autohome Inc. that are not
part of cash equivalents” and income tax paid. Telstra’s experienced a significant improvement
in terms of generating more receipts from customers. This is evident with increasing receipt from
$ 31163 in 2016 to $ 31288 in 2017. However, due to increasing operations it had to pay more
amount of cash to the suppliers and employees in 2017 compared to 2015 and 2016. In 2016, the
company had included “Net placement of deposits by Autohome Inc. that were not part of cash
equivalents”. It is to be further descent that there was a considerable amount of increase in
government financial assistance obtained by the company in 2017. Moreover, the income tax
payment has also reduced from $ 1860 in 2016 to $ 1751 in 2017 (Reid & Myddelton, D, 2017).
Cash flows from investing activities:
Some of the main items included in the cash from investing activities comprise of

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 “Payments for property, plant and equipment”
 “Payments for intangible assets”
 “Payments for business and shares in controlled entities (net of cash acquired)”
 “Payments for joint ventures and associated entities”
 “Payments for other investments”
 “Proceeds from sale of property, plant and equipment”
 “Proceeds from sale of business and shares in controlled entities (net of cash disposed)”
 “Proceeds from sale of other investments”
 “Distributions received from joint ventures and associated entities”
 “Interest received”
 “Other investing activities”
The various types of payment associated to “property, plant and equipment” are
considered to be a part of proceeds from the advances and deposits. The different types of
payments associated to “property, plant and equipment” are recognised as the amounts which are
needed to conduct business activity. On the contrary, these assets have been conducive in
providing several types of economic benefits to Telstra Corporations which are included as
proceeds (Ramanna, 2014). It needs to be further discerned that Telstra has experienced a
considerable increase in proceeds from sale of other investments and this clearly shows that the
company has been able to generate adequate cash from items included under fixed assets. These
proceeds are considered as a contract specifying the total tenure of the payment and the amount
which is to be received along with any interest payable. However, based on the depiction of
overall cash used in the investment activities it can be clearly depicted that Telstra has made

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more payments than received in 2015, 2016 and 2017 which is mainly due to “payments for
intangible assets and PPE” (Miao, Teoh & Zhu, 2016).
Cash flows from financing activities:
The borrowings of the company signify “net amount disbursed to a borrower on the part
of the lender under the terms of loan agreement”. Under the cash from financing activities
Telstra has included items such as:
 “Proceeds from borrowings”
 “Repayment of borrowings”
 “Repayment of finance lease principal amounts”
 “Share buy-back”
 “Purchase of shares for employee share plans”
 “Finance costs paid”
 “Proceeds from sale of controlled entity shares”
 “Dividends paid to equity holders of Telstra Entity”

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 “Other financing activities”
The overall depictions of the cash from financing activities have revealed that proceeds
from borrowings has considerably decreased in 2017. It is also discerned that company has to
make more repayment of borrowings in 2017, compared to 2016 and 2015. Moreover, the
amount of share buyback is also considerably increased in the recent times. The main rationale
for decreasing trend of net cash flows used in financing activities can be also seen with dividends
paid to the equity holders of Telstra. This has amounted to $ 3763 in 2017. It can be clearly
depicted that the main emphasis for the company in 2017 was seen with an attempt to increase
proceeds from borrowings and purchasing of shares from employee share plans (Collins, Hribar
& Tian, 2014).
Requirement (ii):
It can be clearly recognised from the annual report published by Telstra corporations Ltd
has been segregated into CGU from the “operating activities, investing activities and financing
activities” (Nejad, Ahmad & Embong, 2018). The illustration of a comparative analysis in all the
mentioned areas for the last three years has been depicted below as follows:

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2015 2016 2017
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
8311 8133
7775
5692
2207
4279
6882
3777
6104
Comparative analysis of cash flow categories
of Telstra Corporation Ltd.
Net cash flows from operating activities Net cash flows used in investing activities
Net cash flows used in financing activities
The figure represented above clearly suggests that the net cash flow from operating
activities have shown consistent decrease in in all the three years, due to increasing cash paid to
the suppliers and employees inclusive of GST. On the contrary, the net cash flows used in the
investing activities showed a significant increase from 2015 2016 due to “proceeds from sale of
business and shares in controlled entities” (Damodaran 2016). However, a significant decrease
was observed by the company in 2017 due to more amount of payment made for intangible
assets. Despite of significant increase in proceeds from sales of other investments in 2017, this
amount was offset by increasing payments for fixed assets such as “property plant and

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equipment” and “payment for intangible assets”. Therefore, due to the factors such as more
payments for fixed assets and intangibles and less amount of distributions received from joint
ventures, the company has experienced a cash crunch towards investing activities in 2017
(Christensen et al. 2015).
Other comprehensive income statement:
Requirement (iii):
The annual report of Telstra corporations Ltd has been used to list down the items under
the other comprehensive income statement with “Foreign currency translation reserve, Cash flow
hedging reserve and Foreign currency basis spread reserve”.
Requirement (iv):
It has been depicted that the company has used the reserve for foreign Currency
translation for the conversion of outcomes associated to foreign subsidiaries of “parent firm to
the reporting currency”. The application of cash flow hedging reserve has been conducive in
depicting the firm’s intention to minimise the overall exposure of variations in cash flow of an
asset or liability due to the changes in risk areas such as rate of interest on debt instrument
associated to floating rate. It is also discerned that the income tax expense has been incurred on
the PBT of Telstra (Goh et al. 2016).
Requirement (v):
A more elaborated explanation of net income has been depicted with other
comprehensive income. Telstra corporations have incorporated this statement for assimilating the
important details based on the value of aforementioned items. The main rationale for including
these items are being mentioned in terms of “other comprehensive income statement” as these

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are seen to be providing a more comprehensive and complete overview for the factors associated
to operations of the business which we are not disclosed in the income statement of the company
(Grubert and Altshuler 2016).
Accounting for corporate income tax:
Requirement (vi):
The obligation for tax expense is mainly due to the factors associated to state government
proceedings, federal and municipal activities. In case of Telstra, the total income tax expense has
amounted to $ 1773 in 2017 in contrast to $ 1768 in 2016 (Graham et al., 2017).
Requirement (vii):
It is clearly depicted that Telstra corporations earned profit before income tax expense
amounting to $ 5600 in 2016 and $ 5647 in 2017. This amount has been clearly inherent from the
tax rate of 30% on PBIT.
Requirement (viii):
The review of the deferred tax assets is done by the company at the end of each reporting
period. The carrying amount is seen to be recognised to only that extent it is seen to be probable
as for the sufficient taxable profit which shall be utilised with the benefits of the company. In
addition to this, the company offsets the DTL and DTA in the financial statement which are
related to income taxes levied by the taxation authority (Khan, M., Srinivasan, S. and Tan, 2016).
Requirement (ix):
The different types of disclosures about franking credits as a result of income tax payable
was discerned to be $ 146m in 2017 and $ 158m in 2016. In addition to this, the total amount of

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income tax payable in the subsequent year was observed to be $ 161m in 2017 and $ 176m in
2016 (Klassen, K.J., Lisowsky and Mescall, 2015).
Requirement (x):
The major disclosures from the income tax expense has been included with current tax
expense, “Deferred tax resulting from the origination and reversal of temporary differences” and
“Under provision of tax in prior years”. In addition to this, the income tax expense as per
“Notional income tax expense calculated at the Australian tax rate of 30%” is depicted to be $
1694 in 2017 and $ 2294 (Liu et al., 2016).

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Requirement (xi):
The critical assessment for tax treatment have showed that the company has earned profit
even after deduction of income tax expense. This was evident with increasing “net profit after tax
from continuing operations up by 1.1% to $3.9 billion” (Qamar et al., 2016).
Conclusion
Based on the significant assessments made in the report it can be concluded that the
overall depictions of the cash from financing activities have revealed that proceeds from
borrowings has considerably decreased in 2017. It is also discerned that company has to make
more repayment of borrowings in 2017, compared to 2016 and 2015. Some of the main
consideration of the items under cash from operating activities have included the “Receipts from
customers”, “Payments to suppliers and employees (Inclusive of GST)”, “Government grants
received”, “Net placement of deposits by Autohome Inc. that are not part of cash equivalents”
and income tax paid. In terms of cash generated from investing activities the various types of
payment associated to “property, plant and equipment” are considered to be a part of proceeds
from the advances and deposits. The different types of payments associated to “property, plant
and equipment” are recognised as the amounts which are needed to conduct business activity. As
per the comprehensive income statement analysis it has been depicted that the company has used
the reserve for foreign Currency translation for the conversion of outcomes associated to foreign
subsidiaries of “parent firm to the reporting currency”. The major disclosures from the income
tax expense has been included with current tax expense, “Deferred tax resulting from the
origination and reversal of temporary differences” and “Under provision of tax in prior years”.

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References
Christensen, D.M., Dhaliwal, D.S., Boivie, S. & Graffin, S.D., (2015). Top management
conservatism and corporate risk strategies: Evidence from managers' personal political
orientation and corporate tax avoidance. Strategic Management Journal, 36(12),
pp.1918-1938.
Collins, D. W., Hribar, P., & Tian, X. S. (2014). Cash flow asymmetry: Causes and implications
for conditional conservatism research. Journal of Accounting and Economics, 58(2-3),
173-200.
Damodaran, A., (2016). Damodaran on valuation: security analysis for investment and
corporate finance (Vol. 324). John Wiley & Sons.
Goh, B.W., Lee, J., Lim, C.Y. & Shevlin, T., (2016). The effect of corporate tax avoidance on
the cost of equity. The Accounting Review, 91(6), pp.1647-1670.
Graham, J.R., Hanlon, M., Shevlin, T. and Shroff, N., (2017). Tax Rates and Corporate
Decision-making. The Review of Financial Studies, 30(9), pp.3128-3175.
Grubert, H. & Altshuler, R., (2016). Shifting the burden of taxation from the corporate to the
personal level and getting the corporate tax rate down to 15 percent.
Khan, M., Srinivasan, S. & Tan, L., (2016). Institutional ownership and corporate tax avoidance:
New evidence. The Accounting Review, 92(2), pp.101-122.

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Klassen, K.J., Lisowsky, P. & Mescall, D., (2015). The role of auditors, non-auditors, and
internal tax departments in corporate tax aggressiveness. The Accounting Review, 91(1),
pp.179-205.
Liu, Y., Li, X., Zeng, H. & An, Y., 2016. Political connections, auditor choice and corporate
accounting transparency: evidence from private sector firms in China. Accounting &
Finance.
Miao, B., Teoh, S. H., & Zhu, Z. (2016). Limited attention, statement of cash flow disclosure,
and the valuation of accruals. Review of Accounting Studies, 21(2), 473-515.
Nejad, M. Y., Ahmad, A., & Embong, Z. (2018). Value Relevance Of Other Comprehensive
Income. Asian Journal of Accounting and Governance, 8, 133-144.
Qamar, M.A.J., Khalil, F. & Akhtar, W., (2016). Corporate Governance Culture Transmission in
Mutual Funds: Directors as Vector of Transmission. International Journal of Academic
Research in Accounting, Finance and Management Sciences, 6(2), pp.175-183.
Ramanna, K., (2014). Political standards: Accounting for legitimacy.
Reid, W., & Myddelton, D. R. (2017). Cash flow statement. In The Meaning of Company
Accounts (pp. 16-16). Routledge.
Schaltegger, S., Etxeberria, I.Á. & Ortas, E., (2017). Innovating Corporate Accounting and
Reporting for Sustainability–Attributes and Challenges. Sustainable Development, 25(2),
pp.113-122.
Telstra.com.au. (2018). Telstra - Our company. [online] Available at:
https://www.telstra.com.au/aboutus/our-company [Accessed 21 May 2018].

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