Corporate Financial Accounting: Analysis of Myer Limited's Tax Activities

This report evaluates the tax amount, deferred tax amount, financial statement, tax provisions and various other tax activities and the figures of an Australian company, Myer limited. It includes analysis of cash flow statement, comparative analysis of all three main flow of activities, comprehensive income statement, deferred tax items, income tax payable and receivable, income tax paid amount and more.

RUNNING HEAD: Corporate Financial Accounting
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Name of the student-
Topic-Corporate Financial Accounting
University name

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Contents
Introduction................................................................................................................................3
Answer to question-1.................................................................................................................3
Answer to question-2.................................................................................................................4
Comparative analysis of the all three main flow of activities................................................4
Answer to question no-3............................................................................................................5
Answer to question no-4............................................................................................................6
Answer to question no-5............................................................................................................6
Answer to question no-6............................................................................................................6
Answer to question no-7............................................................................................................7
Answer to question no-8............................................................................................................8
Answer to question no-9..........................................................................................................10
Answer to question no-10........................................................................................................10
Answer to question no-11........................................................................................................10
References................................................................................................................................12

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Introduction
The report has been prepared to evaluate the tax amount, deferred tax amount,
financial statement, tax provisions and various other tax activities and the figures of an
Australian company, Myer limited. The economy and the industry of Australian market has
changed a lot and it explains that with the changes, it becomes important for an auditor as
well as an accountant to measure the changes and apply it while preparing and auditing the
annual report of the company.
Myer limited is a departmental store company in Australian market; the company offers
the services and the products through its 60 stores all over the Australia. The company has
launched 11 categories of clothes for woman, man and child. It has also diversified into
toiletry produces (Reuters, 2018). The company’s annual report (2017) explains that the
performance of the company has been altered due to changes into the industry and the
economical changes in the company.
Answer to question-1
Analysis of the Cash flow statement
Analysis over the cash flow statement is a crucial process as it evaluates all the factors
of the company related to the cash outflow and cash inflow of the company and it measures
that whether the recordings of all the cash activities of the company have been done by the
company in better way or not. Operating cash flows, investing cash flows and operating cash
flows of the company are main segment which explains about the different cash outflows and
inflows of the company (McKee, 2005).
The operating cash flows, investing cash flows and operating cash flows of the
company are evaluated to recognize the changes which have occurred. The cash flow
statement explains that the investments and the purchase of new assets for the business and
the operations of the company have reduced the cash flow of the company. The statement

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explains that the other investing expenses have also been increased and it has affected the
total investing cash flow of the company a huge level.
Further, the company has not repaid to the debt holders more in the year of 2017
which has lead to the project to the company to the lower cash outflow. Though, the dividend
amount has been higher by the company to manage the better position in the market (Nobes,
Parker and Parker, 2008).
The net cash flow of the company explains that the actual cash inflow of the company
has been lower from last year. The company has followed the AASB rules to prepare the cash
flow statement of the company.
CASH FLOW
(Amount in $ million)
2016-
07
2017-
07
Investments in property, plant, and
equipment -40 -88
Purchases of intangibles -12 -24
Other investing charges 3 17
Long-term debt issued
Long-term debt repayment -295 -5
Cash dividends paid -16 -49
Net change in cash -158 -164
Answer to question-2
Comparative analysis of the all three main flow of activities
The comparative analysis study on the cash flow statement explains that the cash inflow
position of the company is rapidly decreasing. The company has recorded and managed the
cash flow position in such a way that the better idea about the cash position of the company
has been identified.

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The investing activities of the cash flow explain that the cash flow of the company has
been lowered from the last 2 years. The current position explains that the company is required
to make the policies again to manage the liquidity position of the company (Lamb, 2005).
Further, the financing activities of the company explains that the company has
reduced the debt repayment level so the cash outflow of the company has been lowered and it
explains that the net cash flow position of the company has also been lowered.
Statement of CASH FLOW
(Amount in $ million)
2015-
07
2016-
07
2017-
07
Cash Flows From Operating Activities
Net cash used for investing activities -62 -58 -109
Net cash provided by (used for) financing
activities -55 -99 -54
Net change in cash -117 -158 -164
Free cash flow 16 97 37
The comparative study explains that the cash flow position of the company has been
lowered from the last year.
Answer to question no-3
Comprehensive income statement of Myer Limited explains about those items which
might to be reclassified in the profit and loss of the company. The main items of
comprehensive income statement of the company are exchange rate differences and cash
flows hedges.
The below image explains that the comprehensive income f the company is $ 876,000
in 2017 which has been higher from $ - 14,707,000. This explains that the current changes in
the financial performance of the company are positive and due to it, the total comprehensive
income of the company has been higher from $ 11,939,000 to $ 12,815,000 (Waegenaere and
Sansing, 2008).

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Answer to question no-4
The image in question number 3 explains that mainly 2 items have been added by the
company in the comprehensive income statement which are cash flow hedges and the
exchange rate differences. Cash flow hedges and exchange rate explains about those incomes
of the company which has been raised through foreign investment by the company. It just
explains about the fluctuations in the current and the exchange rate of the company (Yahoo
finance, 2018).
These items express about the changes in the business at a particular day whereas the
income statement of the company measures the performance of the business as a particular
day.
Answer to question no-5
The annual report (2017) of Myer limited explains that the company has presented 2
different statements named by income statement and other comprehensive income statement
to measure and show the actual profit of the company. The items of comprehensive income
statement are not included in the income statement of the company because of FASB rules.
The items of comprehensive income statement changes rapidly in the businesses and
due to their no direct connection with the daily operations, current activities and the business
of the company, it is not shown in the income statement of the company. The different
statement explains about the clear view of the business and a better performance of the
company.

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Answer to question no-6
The total tax expenses of the company in 2017 are $ 18,274. Further, the image
explains that the tax expanses of the company in 2016 were $ 20,152. The tax amount of
Myer limited has been lowered by $ 1908. The income statement of the company explains
that the main reasons behind lower income tax amount in the current year are lower sales
revenue of the company.
Changes into the total revenue of the company directly affect the tax amount of the
company. The tax amount is calculated on the basis of the total revenue of the company. It
measures that if the sales amount would be lower than automatically the tax amount of the
company would be lower (Floropoulos et al, 2010).
Answer to question no-7
The tax definition explains that the tax amount is calculated on the basis of the total
revenue of the company. A country always discovers a fixed % of corporate income tax
which is applied on the total earnings after tax of the company to measure the total amount of
tax.
In case of Myer limited, the accenting profit of the company is $ 30,213 and the
taxation percentage of Australia is 30%. It explains that the total tax amount of the company
on the basis of the accounting profit should be $ 30,213 * 30% = $ 9064,000.
However, the income statement of the Myer limited explains that the total tax amount
of the company in 2017 is $ 18274,000.

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It briefs that the actual tax expanses of the company is quite higher than the accounting
taxation amount. Annual report (2017) of Meyer limited explains that the changes in the
taxation profit has taken place due to various non deductable losses, assets impairment,
capital losses which has not been recognized previously and various other sundry items
which has not been added into the profit and loss accounting of the company (Nielsen,
Raimondos-Møller and Schjelderup, 2010).
This image briefly explains that due to above stated factors the taxation amount of the
Myer limited has been improved by $ 191,000. The annual report clearly states that the
taxation figure has been calculated in Myer limited on the basis of the AASB 112 rules.
Answer to question no-8
Deferred tax items are presented in the balance sheet of the company which explains
about the temporary differences among the actual tax amount and the estimated tax amount of
the company. the below image explains that the total deferred tax assets of the company was
$ 43,432,000 in 2017 which has been set off by the company and thus no balance tax amount
of deferred tax assets has been left in the organization.
However, the deferred tax liabilities of the company has been studied and it has been
recognized that the total changes into the deferred tax liabilities of the company were $
128,006,000 in 2017 out of which 4 43,432 has been set off as provision amount and $
84,574,000 amount has been left in the deferred tax assets of the company which would be
shown in the balance sheet of the company.

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The main reason behind the deferred tax liabilities of the company are huge difference
among the PE, deferred income, bard names of the company and the sundry items. It has been
recognized that the deferred liabilities or assets are quite normal in an organization.

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Answer to question no-9
Income tax payable and income tax receivable are also recognized as current tax
liabilities and current tax assets respectively. The current tax assets and current tax liabilities
figure explains about those items which have been added into the balance sheet of the
company due to the differences among the income tax amount and the tax paid amount.
The balance sheet express that the current tax liabilities of the company are $
1992000. It explains that the company has not paid 1,992,000 amounts to the government,
And in very next year, company has to pay the amount to reduce the liabilities of the
company (Istrate, 2011).
The main reason behind occur the current tax liabilities of the company is the less
taxation amount has been paid by the company from the estimated taxation amount.
Answer to question no-10
Income tax paid amount in the cash flow statement explains about the $ 27,759,000.
And the income tax amount in the income statement explains about $ 18,274,000. It briefs
that the company has paid more than the tax amount of the company.
The main reason behind the difference is the last year tax expenses which have been
paid by the company in the current year to manage the performance and the position of the
company. The cash flow statement only focuses on the current yea cash flow of the company
whereas the income statement explains about current year expenses liability of the company
(Radebaugh, Gray and Black, 2006).
Answer to question no-11
Interesting thing

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the interesting thing about the study was different income tax amount in the income
statement, balance sheet and cash flow statement. Theire recording and treatment notes were
also interesting.
Surprising thing
The surprising thing of the study is evaluation and the differences among such income
tax figures. The company has recorded all the taxation data with working notes to offers a
clear view.
Difficulty
The difficult part explains that the performance and recording process of the company
is quite better. It briefs about better position of the company, Myer limited.
Conclusion
To conclude, Myer limited has followed the AASB 112 rules to measure and record
all the taxation figures of the company.

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References
Annual report. 2017. Myer limited. [online]. Available at:
http://investor.myer.com.au/FormBuilder/_Resource/_module/dGngnzELxUikQxL5gb1cgA/
file/Myer_Annual_Report_2017.pdf (accessed 25/5/18).
Floropoulos, J., Spathis, C., Halvatzis, D. and Tsipouridou, M., 2010. Measuring the success
of the Greek taxation information system. International Journal of Information
Management, 30(1), pp.47-56.
Istrate, C., 2011. Evolutions in the Accounting–Taxation (Dis) connection in Romania, After
1990. Review of Economic & Business Studies, 4(2), pp.43-61.
Lamb, M. 2005. Taxation: An interdisciplinary approach to research. Oxford University
Press on Demand.
McKEE, T.E., 2005. Earnings management: an executive perspective. South-Western Pub.
Nielsen, S.B., Raimondos-Møller, P. and Schjelderup, G., 2010. Company taxation and tax
spillovers: Separate accounting versus formula apportionment. European Economic
Review, 54(1), pp.121-132.
Nobes, C., Parker, R.B. and Parker, R.H., 2008. Comparative international accounting.
Pearson Education.
Radebaugh, L.H., Gray, S.J. and Black, E.L., 2006. International accounting and
multinational enterprises. New York, NY: John Wiley & Sons.
Reuters. 2017. Myer limited. [online]. Available at:
https://www.reuters.com/finance/stocks/company-profile/MYR.AX (accessed 25/5/18).
Waegenaere, A. and Sansing, R.C., 2008. Taxation of international investment and
accounting valuation. Contemporary Accounting Research, 25(4), pp.1045-1066.
Yahoo Finance. 2017. Myer limited. [online]. Available at:
https://finance.yahoo.com/quote/MYR.AX/financials?p=MYR.AX (accessed 25/5/18).

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