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Corporate Accounting Assignment - “Wesfarmer Ltd”

   

Added on  2020-11-12

11 Pages3553 Words69 Views
Corporate Accounting

Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................11) Listing of each items of equity................................................................................................12) Firm’s tax expense in its latest financial statements...............................................................33) Company tax rate times your firm’s accounting income........................................................34) Deferred tax assets/liabilities..................................................................................................45) Current tax assets or income tax payable recorded by company.............................................66) Income statement same as the income tax paid shown in the cash flow statement................67) Interpretation...........................................................................................................................7CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8APPENDEX.....................................................................................................................................9

INTRODUCTIONCorporate accounting deals with the processes like preparation of balance sheet, financialreports and records, cash flow statements etc. In present time accountant of companies usesspecial concept of accounting that help them to prepare financial accounts, cash flow statements,analysis and interpretation of financial result and accounting. This help them in making effectivedecision such as amalgamation, absorption, preparation of consolidated statements. Tounderstand the importance of corporate accounting the company selected is “Wesfarmer Ltd”that is listed on ASX. In this project, identification and interpretation of each item of equity is done. Firm taxexpense in latest financial statements, comment on deferred tax assets liabilities is reported andreason for their reporting is analysed. This report also shows current tax assets or income taxpayable recorded by company, reason why the income tax expenses shown in the incomestatements are the same as in the cash flow statements. MAIN BODY1) Listing of each items of equityEquity items: The item that are listed on equity are consider to be owner capital worth that is beingderived from the total liabilities and assets that they carry them within company. In general,these types of account and their description shows the amount actual owner's equity that dependon the nature of firm’s operation. From the annual report of “Wesfarmers Ltd” the data is takenfrom which following information is collected. Thus there are assorted types of equity accountthat are combined together in order to make total shareholder equity. Some examples of equityare common stock, issued capital, contributing surplus, retained earnings, reserved share andadditional paid-up capital. These items are discussed below as per the annual statementsmaintained by company (Wesfarmers Ltd.):Issued capital: It refers to the actual number of shares that have been issued by the entityto its shareholder (DeBusk, 2012). In accounting terms, the allotted share or sharesubsequently held by the existing shareholder are known as issued capital. From theannual report 2017-18 of “Wesfarmers Ltd” it has been observed that issued capital foryear 2017 was $22268 that had grown up to $22277 in year 2018. There is an increase in1

number of shareholders during the year of 2018 because respective company is growingat a fast pace and give better result on investment to following shareholder. “WesfarmersLtd” is one of the leading company thus it holds good market share and generate hugeprofit throughout the year. Thus, board of director also decide to increase the rate ofreturn on investment that has also increased the issued capital. Reserved share or common stock: This is considered to be the security of share anentity has set aside for a particular administrative reason that shows the ownership.Reserved share consists of bonds, debenture, securities etc. From the balance sheet of“Wesfarmers Ltd” the amount of common stock increase form ($26) in year 2017 to($43) in year 2018. The primary reason of fluctuation among the value of common stockis basically due to the changes in amount of dividend and interest income obtained by thecompany during an accounting year (Edgerton, 2012). Retained earnings: These are termed as the profit that a company has earned to dateafter deducting any dividend or any other distribution that have been paid to investorduring an accounting year. Manager hold this in order to reinvest in company business orto write off any outstanding debts. From the annual report of “Wesfarmers Ltd” 2017-18it has been observed that balance of retained earning has decreased from $1509 to $176.The main reason for the reduction in retained earnings is that company may haverepurchase of company stock, paid some loans form retained amount or there has beenloss for the company during an accounting year. Reserve: These are considered to be the types of gains that have been incurred bycompany in order to meet any kind of future contingencies. It is observed that capitalunder this account is being procured either from selling price of fixed assets or from totalshareholder equity. The balance sheet of “Wesfarmers Ltd” shows the balance of reserveduring year 2018 $344 and in year 2017 it was $190. There is increase in the balancebecause company is doing well in the market and earning huge profit. Therefore, theymaintain sufficient amount into reserve to handle unexpected situation.ItemsYear Wesfarmers LtdIssued capital201722,268201822,277Reserved share2017(26)2

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