Course ID: Corporate Accounting

2018 Cash flows from investing activities: Some of the important categories of information included under the “cash from investing activities” are listed below as follows: “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” “Payments for other investments” “Payments for other investments”

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
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
References......................................................................................................................................12

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Cash flow statement:
Requirement (i):
The main depictions of the report are based on cash flow statement prepared for “Telstra
Corporation Ltd”. Telstra is known as one of the most renowned telecommunications brand
across Australia “offering full range of communications services and competing in all
telecommunications markets”. The report is prepared as per the segmentation of cash flow based
on “operating activities, investing activities and financing activities” (Francis, Pinnuck and
Watanabe 2014).
Cash flows from operating activities:
The important excerpts from cash from the operating activities are included with 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” along with several types of other IT payment. The company has further
experienced a considerable amount of improvement in terms of extrapolating higher receipts
from the customers (Accounting Management 2015). The increased amount of receipts of
customer is depicted with increase of receipt from $ 31163 in 2016 to $ 31288 in 2017. The
increasing nature of operations had to pay more amount of cash to the suppliers and employees
in 2017 compared to those on 2015 and 2016. In 2016, Telstra Corporation is comprised of “Net
placement of deposits by Autohome Inc. that were not part of cash equivalents”. It needs to be
also discerned that the considerable amount of increase in the assistance by government was

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evident in 2017. In addition to this, the IT payment of the company was reduced from “$ 1860 in
2016 to $ 1751 in 2017” (Cao, Chychyla and Stewart 2015).
Figure: Cash flow from operating activities for Telstra Corporation in 2015, 2016 and 2017
(Source: Telstra.com.au. 2018)
Cash flows from investing activities:
Some of the important categories of information included under the “cash from investing
activities” are listed below as follows:
 “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”

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 “Other investing activities”
The payment considerations for “property, plant and equipment” are included from the
proceeds as a result of deposits and advances. Moreover, the payments related to “property, plant
and equipment” are formed as a part of amount which are essential to conduct business activity.
On the other hand, the inclusion of these assets has been beneficial in providing different types
of “economic benefits” to “Telstra Corporations” which are considered from proceeds. It is to be
also understood that the organisation has experienced a significant amount of increase in terms of
proceeds from investments and sales which are clearly shown with adequate cash generated in
the particulars under the fixed assets. The proceeds are further formed under a contract
specifying the total time for payment and the amount which are to be included with the interest
amount payable. Despite of this, the different types of interpretation of information have shown
that overall cash utilised in the investment activities has been depicted with more payments than
received in the subsequent years. The main rationale for such a situation is mainly because of
“payments for intangible assets and PPE” (Biscarri 2014).

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Figure: Cash flow from investing activities for Telstra Corporation in 2015, 2016 and 2017
(Source: Telstra.com.au. 2018)
Cash flows from financing activities:
The total amount of borrowings of the company are being duly identified with the amount
disbursed to the borrowers on behalf of the lender as per the terms and conditions of the loan.
The different types of financing activities from cash for Telstra Corporation comprises of:
 “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”
 “Other financing activities”
The important evaluation of the financial activities has depicted the proceeds from
borrowings with a considerably decreased amount in 2017. It is further assist that company
has made more repayment for borrowings in 2017 in compared to the other years. In addition
to this, the total amount for the share buyback have considerably escalated in the recent
times. This is due to the fact that there is a decreasing trend in the cash flows used in
financing activities which is often identified with the dividends paid to the equity holders for
Telstra. The total amount for this has been depicted as $ 3763 in 2017. Some of the other

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main interpretations of the study have attempted to increase the total amount of proceedings
from borrowings and purchasing of shares based on share plans of employee (Edwards,
Schwab and Shevlin 2016).
Figure: Cash flow from financing activities for Telstra Corporation in 2015, 2016 and 2017
(Source: Telstra.com.au. 2018)
Requirement (ii):
The recognition of overall category of items from the excerpts of annual report of the
company has been divided into CGU from “operating activities, investing activities and
financing activities”. The comparative analysis of the illustrations has been depicted as per last
three years (Needles, Powers and Susan V. Crosson 2014).

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2015 2016 2017
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
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
Figure: Comparative analysis of cash flow categories of Telstra Corporation Ltd.
(Source: As Created by The Author)
The inference made in the graphical representation of data suggest that the cash flow in
terms of operating activities have decreased over the years. This is mainly due to the fact of
increasing amount of cash paid to the employees and suppliers including the GST amount.
Whereas, the net cash flow from the investing activities are depicted with the considerable
amount of increase from 2015 to 2016 because of the shares in controlled entities and various
types of proceeds from sales of business (Karpoff et al. 2017). However, in this particular
category, a significant decrease was observed in 2017 as the company spent more amount of

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expenses on intangible assets. It needs to be for the discerned that although there was an increase
in the proceeds from sales in 2017 for other investment activities, this amount had negligible
effect due to increasing payments for fixed assets like “property plant and equipment” and
“payment for intangible assets”. Henceforth, the various factors associated to payment for PPE,
the company has been experiencing an overall cash crunch pertaining to the investing activities
in the FY 2017 (Needles, Powers and Susan V. Crosson 2014).
Other comprehensive income statement:
Requirement (iii):
The financial statement analysis of “Telstra corporations Ltd” have been conducive in
identifying the other comprehensive income with inclusion of items such as “Foreign currency
translation reserve, Cash flow hedging reserve and Foreign currency basis spread reserve” (Bay,
Catasús and Johed 2014).
Requirement (iv):
Some of the main consideration of the information evaluated by the company is based on
the reserve for foreign currency translation associated to conversion of outcomes related to
foreign subsidiaries. These subsidiaries are often considered as the of “parent firm to the
reporting currency”. The important consideration for maintenance of cash flow hedging reserve
is beneficial for the company and interpretation of exposure to radiation is in cash flow of asset
or liability pertaining to the changes in risk areas like “rate of interest on debt instrument
associated to floating rate”. In addition to this, the IT expense is considered to be incurred on
part of the PBT earned by Telstra (Financial Reporting Council 2014).

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Requirement (v):
The description of net income has been considered with the study of comprehensive
income. The main reason for the inclusion of other comprehensive income statement is related to
provide a more complete overview of the items of operation which we are not generally included
as a part of the income statement of the company. Telstra corporations have provided a more
diversified disclosure on the net profit which was marked shown in an elaborated manner in the
income statement (Garrett, Hoitash and Prawitt 2014).
Accounting for corporate income tax:
Requirement (vi):
The important obligation for tax expense have been led by the factors related to “state
government proceedings, federal and municipal activities”. With particular reference to Telstra,
the total amount of IT expense is valued at “$ 1773 in 2017 in contrast to $ 1768 in 2016”.
Requirement (vii):
It can be also depicted that the organization has earned PBIT which is amounted to $
5600 in 2016 and $ 5647 in 2017. Moreover, this particular amount is inherent with “tax rate of
30% on PBIT”.
Requirement (viii):
A significant review of the DTA performed by Telstra corporations Ltd during the end of
reporting period shows that the carrying amount of such assets are recognised only that extent
where the sufficient taxable profit is utilised in favour of the company. Furthermore, Telstra has
offset income tax levied by the taxation authority based on the DTL and DTA (Heakal 2017).

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Requirement (ix):
The important depictions of the assertions for the franking credits are taken into account
with the main results of IT payable which is amounted to $ 146m in 2017 and $ 158m in 2016.
Moreover, the overall amount of IT payable in 2017, 2016 and 2015 was seen to be increasing in
nature. The total amount of IT payable in the “subsequent year was observed to be $ 161m in
2017 and $ 176m in 2016” (Bay, Catasús and Johed 2014).
Requirement (x):
The critical disclosure is associated to the income tax expense have been taken into
account with “current tax expense, Deferred tax resulting from the origination and reversal of
temporary differences”. Along with this the company has included the major disclosures of
income tax with the “Under provision of tax in prior years”. Furthermore, “Notional income tax
expense calculated at the Australian tax rate of 30%” have been considered with a total amount
of “$ 1694 in 2017 and $ 2294 in 2016” (Edwards, Schwab and Shevlin 2016).

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Figure: Illustration of major components of income tax expense of Telstra in 2017 and 2016
(Source: Telstra.com.au. 2018)
Requirement (xi):
The significant assertions based on the tax treatment have been able to depict that the
company has on the profit after deduction in form of different types of income tax expense.
These “income tax expenses” are evident with the facts such as with increasing “net profit after
tax from continuing operations up by 1.1% to $3.9 billion”.

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References
Accounting Management (2015) Debt to equity ratio - explanation, formula, example and
interpretation | Accounting for Management, Financial Statement Analysis.
Bay, C., Catasús, B. and Johed, G. (2014) ‘Situating financial literacy’, Critical Perspectives on
Accounting, 25(1), pp. 36–45. doi: 10.1016/j.cpa.2012.11.011.
Biscarri, J. G. (2014) ‘FINANCIAL ACCOUNTING’, in Current topics in accounting, pp. 1–9.
doi: 10.1016/B978-0-12-397920-9.09994-7.
Cao, M., Chychyla, R. and Stewart, T. (2015) ‘Big data analytics in financial statement audits’,
Accounting Horizons, 29(2), pp. 423–429. doi: 10.2308/acch-51068.
Edwards, A., Schwab, C. and Shevlin, T. (2016) ‘Financial constraints and cash tax savings’, in
Accounting Review, pp. 859–881. doi: 10.2308/accr-51282.
Financial Reporting Council (2014) ‘The UK corporate governance code’, Financial Reporting
Council, (September), pp. 1–36. doi: Retrieved from Financial Reporting Council.
Francis, J. R., Pinnuck, M. L. and Watanabe, O. (2014) ‘Auditor style and financial statement
comparability’, Accounting Review, 89(2), pp. 605–633. doi: 10.2308/accr-50642.
Garrett, J., Hoitash, R. and Prawitt, D. F. (2014) ‘Trust and financial reporting quality’, Journal
of Accounting Research, 52(5), pp. 1087–1125. doi: 10.1111/1475-679X.12063.
Heakal, R. (2017) ‘What is a cash flow statement?’, Investopedia, pp. 1–16. Available at:
https://www.investopedia.com/articles/04/033104.asp%0Ahttp://www.investopedia.com/
articles/04/033104.asp.

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Karpoff, J. M., Koester, A., Lee, D. S. and Martin, G. S. (2017) ‘Proxies and databases in
financial misconduct research’, Accounting Review, 92(6), pp. 129–163. doi: 10.2308/accr-
51766.
Needles, B. E., Powers, M. and Susan V. Crosson (2014) Principles of Accounting, Financial
Accounting. doi: 10.1037/h0092877.
Telstra.com.au. (2018). Telstra - Our company. [online] Available at:
https://www.telstra.com.au/aboutus/our-company [Accessed 21 May 2018].