Corporate Accounting: Equity, Liability, Cash Flow Statement and Income Tax

This report provides enough information regarding the preparation of equity and liability, cash flow statement and Accounting for corporate income tax. The report covers Australian dairy nutritional group, clean seafood, and Australian agricultural company limited. It includes a three-year evaluation of corporate income tax calculation process and performance evaluation for managers.

HI 5020 CORPORATE ACCOUNTING

Executive Summary
The following report has provided enough information regarding the preparation of equity and
liability, cash flow statement and Accounting for corporate income tax. The following report is
quite informative in terms of having three period evaluation of Corporate Income Tax evaluation
and calculation process. It also have provided information about performance evaluation for
managers in companies that clearly suggest the requirement for activating in the shareholder
fund for the companies provided and collected
1

Table of contents
Introduction......................................................................................................................................3
Equity & liability.............................................................................................................................3
Cash flows statement.....................................................................................................................12
Other comprehensive income statement........................................................................................23
Conclusion.....................................................................................................................................31
List of references...........................................................................................................................32
2

Introduction
Accounting is one of the most significant ways through which one can define the performance of
a company and can know about financial aspects about the company in an evident manner. In
this project financial valuation of three ASX listed companies will be done which is Australian
dairy nutritional group, clean seafood and Australian agricultural company limited all of these
companies belong from food, beverage and tobacco industry and are publically lost in the ASX.
In this project, there will discussion over different financial aspects of the following companies
to evaluate the company’s financial performance and compare the three companies financially.
Equity & liability
Listing each item of equity reported and discussing any changes in each item of equity for
the firm’s over last three years articulating the reasons for the change
Australian dairy nutritional group
Figure 1: Statement of changes in Equity
(Source: Dairy Australia, 2019)
Retained Surplus: Retained surplus or retained earning is the amount of profit which is left after
the accounting for dividend payments is done. There is some amount of dividend which is kept
in order for further operations of the company. Hence through the Statement of equity changes of
the company the value of retained surplus in FY 2016 was 26358, at FY 2017 was 25,984 and in
3

FY 2018 was recorded at 29,710. The amount has been floating as because the company’s
income would have differed in the following years.
Available for sales reserve: This is reserve which is kept for the sales of the company. The
reserve was amounted at 74 in FY 2016, in FY 2017 399 and in FY 2018 311 which means the
company increased their verses as to cover the increasing risk of credit sales (Ni & Van Wart,
2015).
Clean seafood
Figure 2: Statement of changes in Equity
(Source: Seas, 2019)
Share capital: Share capital is amount capital which company collect through general and
equity share which issue in stock market. The balance of this element in 2016 was valued at
157,736, in FY 2017 165,998 and in FY 2018 182,345 which has increased due to increase in
investment for the company.
Share Rights reserve: Reserves are kept for share right which are preserve by equity
shareholders and has been recorded as null in 2016, 172 in 2017 and 661 in 2018 which the
company increased rights reserv in a drastic way to give security of the invested amount.
Accumulated loss: Accumulated loss is loss which has accumulated from the day when the
company started operating it can be seen that value of this in 2016 was 114,819 whereas in 2017
it was valued at 114617 and in 2018 111,237.
Australian agricultural company limited
4

Figure 3: Statement of changes in Equity
(Source: AACo, 2019 )
Contributed equity: Contributed equity is the equity is has be contributed in forme of equity
shares from the company's investor. The balance of the following as on 2016 was 461,213
whereas in FY 2017 it was valued at 490,713 and in FY 2018 the value was 531,937 which mean
the share investment within the company has increased (Atanasov & Black, 2016).
Reserve: Reserve is created by a company in order make sure there evident amount of monetary
reserve for future incident the value in 2016, 2017 and 2018 were 366,085, 396,606 and 417,718
respectively.
Retained earnings: Retained earning is earning retained by the company for future purposes in
FY 2016 the value 58,838, in 2017 the value was 130,424 and in 2018 the amount was 27,865.
Listing each item of liability reported and Discussing any changes in each item of liability
for your firm's over last three years articulating the reasons for the change
Australian dairy nutritional group
Liabilities 2016 2017 2018
5

Current liabilities
Trade and other payables 10240 11310 13861
Provisions 2451 2650 2568
Non-current liabilities
Provisions 654 790 538
Total non-current
liabilities
13345 14750 16967
Table 1: Liabilities
(Source: Self generated )
The company has trade payables which mean it has payables which are yet to be paid a and there
are Short term provisions the company has to meet. The value of trade payable in year 2016,
2017 and 2018 are 10240, 11310, 13861 respectively whereas the provision is 2451, 2650, 2568.
The trade payables have been fluctuating which can be due to its operations. The company also
has long term provisions which have been 654, 790, 538 in year 2016, 2017, 2018. The long term
borrowing have increased in the company because the company has increased debenture
holdings and have taken pledge to grow their business (Liu, Li, Zeng & An, 2017).
Clean seafood
Liabilities 2016 2017 2018
6

Current
Trade and other payables 3101 4083 6504
Borrowings 3063 330 622
Provisions 545 726 862
Current liabilities 6709 5139 7988
Non-current
Borrowings 68 832 1727
Provisions 189 132 178
Non-current liabilities 257 964 1905
TOTAL LIABILITIES 6966 6103 9893
7

Table 2: Liabilities
(Source: Self generated )
The current liabilities which the company has is Trade Payables, borrowings and provisions.
Borrowings is the amount which is borrowed by the company on a short term basis. The trade
payable values of the company in the there has been 3101, 4083 and 6504. Under non current
liabilities section the company has Borrowings and pro wings the borrowings are on long term
basis and values of the following in the last three years is 68, 832, 1727.
Australian agricultural company limited
Current Liabilities 2016 2017 2018
Trade and other payables 32775 31242 27525
Provisions 3715 3727 3445
Borrowings 4176 3691 3025
Derivatives 8892 6186 457
Total Current Liabilities 49558 44846 34452
Non-Current Liabilities
8

Provisions 1798 1977 5215
Borrowings 365194 362918 353363
Deferred tax liabilities 80433 118171 84747
Total Non-Current
Liabilities
447425 483066 443325
Total Liabilities 496983 527912 477777
Table 3: Liabilities
(Source: Self generated )
The components of short term or current liabilities of the firm were trade payables, provisions,
borrowings and derivatives the current liabilities value of the firm in last years has bee as follows
49558, 44846 and 34452. The current liability of the company has decreased this mean the
company has used their monetary funds instead of short term liabilities to operate in a significant
manner. The Non current assets of the company Comprise of provision, borrowing and deferred
tax liabilities. The non current liabilities of the company has decreased in the recent years as the
value in three has been 447425, 483066 and 443325 (Caskey & Laux, 2016).
Comparative analysis
Debt or liability comparison
Comparing the total liability of the
companies
2016 2017 2018
9

Australian dairy nutritional group 13345 14750 16967
Clean seafood 6966 6103 9893
Australian agricultural company limited 496983 527912 477777
Table 4: Comparing the total liability of the companies
(Source: Self generated )
Figure 4: Graph showing comparing the total liability of the companies
(Source: Self generated)
Equity Comparison
Comparing the total equity of the
companies
2016 2017 2018
10

Australian dairy nutritional group 26284 25585 29399
Clean seafood
42917 51553 71769
Australian agricultural company limited
886136 1017743 977520
Table 5: Comparing the total equity of the companies
(Source: Self generated )
11

Figure 5: Comparing the total equity of the companies
(Source: Self generated )
In comparison of liabilities and debts of the company it can be said that debt debt capital of all
the firm has quiet high but Australian Agricultural Company Limited is way ahead of the two
companies. And the same goes with the liabilities as the liability of Australian Agricultural
Company Limited is way ahead the other two companies. This states that the company has huge
capitol couture in comparison to other two companies (Watson, 2015).
Cash flows statement
The cash flow statement helps in understanding the management capability of an organisation
regarding the use of cash in their business work. Cash flow statement is also referred to as a
financial statement which summarises the entry and exit of cash and cash equivalent.
iv. Australian dairy nutritional group
12

Figure 5: Statement of cash flows 2016 of Australian dairy nutritional group
(Source: Dairy Australia, 2019 )
13

Figure 6: Statement of cash flows 2017 and 2018 of Australian dairy nutritional group
(Source: Dairy Australia, 2019)
On discussing the prime elements from the statement of cash flow for the organisation Australian
dairy nutritional group we find that interest received by the organisation in the year 2016
amounted to 359,000 Australian Dollars. The interest received by the organisation increased in
2017 to 453,000 Australian dollar. This clearly provides the insight that the organisation have
provided an external loan to creditors who have been repairing in the proper interval as per
provided to them. The rise in the amount of interest received to 483,000 Australian Dollar from
the year 2016 and 2017 justifies a strong flow of amount inflow. Other than interest received
another important element that is noted in the cash flow statement of the organisation the
Australian daily nutritional group is the profit from disposal of plant and equipment. The
14

continuous fall in the amount (i.e 17000, 62000 and 18000) gathered from the process of selling
plant and equipment from the year 2016, 2017 and 2018 respectively shows that there are a
strong retainment and recycling of non-current assets.
Clean Seas seafood Limited
Figure 7: Statement of cash flows 2016-2017 of Clean Seas seafood Limited
(Source: Seas, 2019 )
15

Figure 8: Statement of cash flows 2016-2017 of Clean Seas seafood Limited
(Source: Seas, 2019)
In terms of considering the statement of cash flow for the organisation the Clean Seas seafood
Limited we observe that out of most of the prime element of the statement of cash flow
important one would be to be discussed is the position of interest received which in the year
2016 was 7000 Australian Dollar. Rio 2017 showed arise in the interest received to 14000
Australian Dollar and then it increased to 63000 Australian dollars in 2018. The significant
growth in the interest received section of the cash flow statement for the organisation shows that
there has been a proper manner of the lending loan amount to external craters who are quite
properly paying off their debts. Other than interest received the effect of proceedings from the
16

sale of plant and machinery seems to have no value s the organization for consecutively 3 years
did not sell its non-current asset. This makes clear that the organization organisation is well
aware of the life expectancy of the non-current assets.
Australian Agricultural company limited
Figure 9: Statement of cash flows 2015-2016 of Australian Agricultural company limited
(Source: AACo, 2019)
17

Figure 10: Statement of cash flows 2017-2018 of Australian Agricultural company limited
(Source: AACo, 2019)
The cash flow statement of the organisation the Australian Agricultural Company Limited have
craftily provided every required information that would be important in order to acknowledge the
way which is actually followed by the cash unit entry and exit from the organisational bank
balance. Out of many important aspects of the cash flow statement, the interest received in terms
of inflow of cash has seemed to be an important one to be discussed with priority. The interest
received in the year 2016 for the organisation valued at 155000 Australian dollars. The value of
interest received somehow did go down to hundred thousand Australian dollars, maybe because
of improper payment of the dues from the debtors of the organisation. The consideration of
proceeding from the selling of asset by the organisation as well the company as it shows that in
18

year 2016 the proceeds valued 180000 Australian dollars. The value increased in the year 2017
and 2018 258000 and 380000 respectively (Schaltegger, Burritt & Petersen, 2017).
v. Comparative analysis
Net cash flow from Operating activities comparison from 2016, 2017 and 2018 for
Australian dairy nutritional group, Clean Seas Seafood and Australian Agricultural
company limited
Net cash flow from Operating
activities comparison
Years
2016 2017 2018
Australian dairy nutritional group -366 6028 820
Clean seafood -2354 -3324 -6815
Australian agricultural company
limited
21789 29264 -39864
Table 6: Net cash flow from Operating activities comparison
(Source: Dairy Australia, 2019)
Figure 11: line chart of Net cash flow from Operating activities comparison
(Source: Self-generated)
19

Analysis: The operating activities performed by the organisation's selected shows that Australian
daily nutritional group in the year 2016 phase negative or outflow of money at the value of 366.
The organisation was able to have positive or inflow of cash in the upcoming two years of 2017
and 2018. The critical outflow of cash was observed 2018 for the organisation Australian
agricultural Company Limited as they faced negative of 39864.
Net cash flow from Investing activities comparison from 2016, 2017 and 2018 for
Australian dairy nutritional group, Clean Seas Seafood and Australian Agricultural
company limited
Net cash flow from Investing activities
comparison
Years
2016 2017 2018
Australian dairy nutritional group 699 -655 3253
Clean seafood -1384 -2439 -4854
Australian agricultural company
limited
21789 -28386 -21440
Table 7: Net cash flow from Investing activities comparison
(Source: self-generated)
Figure 12: line chart of Net cash flow from Investing activities comparison
20

(Source: Self generated )
Analysis: Investing activities performed by the organisation selected shows a great deal of cash
outflow since it is seen that in the year 2017 for Australian agricultural Company Limited there
was a negative flow of 28386. The organisations like Australian daily nutritional group and clean
seafood does have their own set of negative flow of cash but not as close to the negative flow
presented by Austin agricultural Company Limited
Net cash flow from Financing activities comparison from 2016, 2017 and 2018 for
Australian dairy nutritional group, Clean Seas Seafood and Australian Agricultural
company limited
Net cash flow from Financing
activities comparison
Years
2016 2017 2018
Australian dairy nutritional group 0 0 0
Clean seafood 2823 5689 16679
Australian agricultural company
limited
0 27000 29989
Table 8: Net cash flow from Financing activities comparison
Figure 13: line chart of Net cash flow from Financing activities comparison
21

(Source: Self generated )
Analysis: Financing activities for the organisation like Australian agricultural Company Limited
and Clean seafood for the year in 2018 has particularly remained profitable as there is no
negative outflow of cash and is sufficiently supported with positive influence cash. 2018 for the
organisation clean seafood have marked the rise in cash inflow from financing activities at A
Remarkable. From previous year but not close to the gigantic steps undertaken by Australian
Agricultural Company Limited
vi. Cash at the end of the year comparison from 2016, 2017 and 2018 for Australian dairy
nutritional group, Clean Seas Seafood and Australian Agricultural company limited
Cash at the end of the year
comparison
Years
2016 2017 2018
Australian dairy nutritional group 3146 8519 12592
Clean seafood 598 524 5534
Australian agricultural company
limited
14659 42533 11218
Table 9: Cash at the end of the year comparison
(Source: self-generated)
22

Figure 14:
(Source: self-generated)
With every analysis undertaken in the above tables and charts, it can be justified properly that
both the companies have tried very hard to ensure a position of sufficiency for consecutive 3
years from 2016 to 2018. However, after proper evaluation of both negative and positive flow of
cash in the organisation, we can assume that Australian agricultural Company Limited have
clearly gained the top position. With a hefty amount of cash going out, there has been sufficient
inflow of cash through operating activities as well as investing activities as seen in cash flow
statement from 2016 till 2018 for the organisation Australian Agricultural Company Limited
(Maas, Schaltegger & Crutzen, 2016).
Other comprehensive income statement
vii. Elements included in other comprehensive income for the organisation clean Seas seafood
Limited really has it nature to be incorporated sensor change accepted the changes in credit risk
are present in the organisation for all the year from 2016 to 2018. Gains and loss accumulated
from AFS financial assets which are measured at fair value are provided in the comprehensive
income statement for Clean seas seafood Limited (Agrawal & Cooper, 2017).
Derivative financial instruments with include hedging profit and loss have been provided for the
other comprehensive income statement in the organisation the Australian daily nutritional group.
For the year 2016 2017 and 2018 all the hedged profits are included.
23

For Australian Agricultural Company, the information related to the intangible asset
accumulation are included in the statement of the comprehensive income statement.
viii. It is seen that losses as well as gains accumulated by the organisations are not included in
income statement of comprehensive income statement as provided. Unrealized information like
holding securities and foreign currency translation of the organisation are not included.
ix. Australian dairy nutritional group
24

Figure 15: Statement of Comprehensive Income 2015-2016 of Australian dairy nutritional
group
(Source: Dairy Australia, 2019 )
Figure 16: Statement of Comprehensive Income 2017-2018 of Australian dairy nutritional
group
(Source: Dairy Australia, 2019 )
Clean Seas seafood Limited
25

Figure 17: Statement of Comprehensive Income 2016-2017 of Clean Seas seafood Limited
(Source: Seas, 2019)
26

Figure 18: Statement of Comprehensive Income 2017-2018 of Clean Seas seafood Limited
(Source: Seas, 2019)
Australian Agricultural company limited
27

Figure 19: Statement of Comprehensive Income 2017-2018 of Australian Agricultural
company limited
(Source: AACo, 2019)
Figure 20: Statement of Comprehensive Income 2017-2018 of Australian Agricultural
company limited
(Source: AACo, 2019)
Comprehensive income comparision Years
2016 2017 2018
28

Australian dairy nutritional group -3848 -699 3814
Clean Seas Seafood Limited -8982 202 3380
Australian agricultural company
limited
123746 102065 -81983
From the above information regarding the clear evaluation of comprehensive income statement
about Australian dairy nutritional group, clean Seas seafood Limited and Australian agricultural
company we see that, Australian agricultural Company Limited clearly has the highest income
statement from the consecutive three year revaluation of 2016 to 2018 (Balakrishnan, Watts &
Zuo, 2016). However, it is seen that in the year 2018 the organisation that faced of negativity by
81983 but is actually suffice by the huge amount of income from 2016 and 2017.
x.
Accounting for corporate income tax
Tax expenses of companies
In accordance to the annual reports of the companies the Tax expense of Australian dairy
nutritional group and Clean Seafood are exempted from paying tax. On the other hand Australian
29

Agricultural Company Limited has paid 29,275 in 2016, 2017 the value was 24,713 where in
2018 city received a tax benefit of 42,826.
Calculation of effective tax rate
As the two companies are exempted for tax the tax rate cannot calculated whereas for the
Australian Agricultural company limited the calculation is also follows
2016 = 29,275/96299
= 0.304
=30 %
2017 = 24,713/97082
=0.254
= 25%
As in 2018 there was benefit received hence the tax rate cannot be determined.
Commenting on deferred tax assets/liabilities
Australian dairy nutritional group has no recording of deferred tax assets of liability in its
balance or in there annual report which states there no presence of such element in the financial
ents of the company. Where as in Clean Seafood the recognition Deferred Tax asset has been
found in last years. In Australian Agricultural Company Limited it can be seen that deferred tax
asset of 9656 and 10971 has be recognized in 2018 and 2017 respectively whereas in 2016 the
amount was 7282. Deferred tax asset is the current tax which has already being paid whereas
deferred tax liability is current tax which is yet to be paid (Bhasin, 2015).
Increase and decrease in effect tax
The two companies did not have any such change in deferred tax although Australian
Agricultural Company Limited has seen instability in there deferred tax assets and this is result
of increase in gaps between the carrying amount of tax bases of assets and liabilities.
Tax calculation at book rate
ADNL
Income = 3726
Tax Rate= 30%
Tax = 3726 * 30%
= 1118
Clean Seafood
30

Income = 3380
Tax Rate= 30%
Tax = 3380 * 30%
= 1014
AACL
The company incurred loss in 2018 there cannot calculation of tax at book as tax cannot be
charged over loss.
Difference between cash and book tax rate
The difference between cash and book rate is that cash rate is realistic and includes different
adjustment which are required be done in order to charge the tax this may include some prepaid
tax adjustment whereas book rates are defined at a certain percentage.
Conclusion
Every understanding of comprehensive report guides the organisational performance. It clearly
justifies the way organisations need to order to ensure a successful business operation for future.
The report have clearly developed consideration of how one need to evaluate the equity and
liability, cash flow statement and corporate income tax.
31

List of references
AACo, A. (2019). Annual Reports | AACo. Retrieved from https://aaco.com.au/investors-
media/annual-reports Retrieved on 21 January 2018
Agrawal, A., & Cooper, T. (2017). Corporate governance consequences of accounting scandals:
Evidence from top management, CFO and auditor turnover. Quarterly Journal of
Finance, 7(01), 1650014.
Atanasov, V., & Black, B. (2016). Shock-based causal inference in corporate finance and
accounting research.
Balakrishnan, K., Watts, R., & Zuo, L. (2016). The effect of accounting conservatism on
corporate investment during the global financial crisis. Journal of Business Finance &
Accounting, 43(5-6), 513-542.
Bhasin, M. L. (2015). Corporate accounting fraud: A case study of Satyam Computers Limited.
Caskey, J., & Laux, V. (2016). Corporate governance, accounting conservatism, and
manipulation. Management Science, 63(2), 424-437.
Dairy Australia, A. (2019). Annual report | Dairy Australia. Retrieved from
https://www.dairyaustralia.com.au/about-dairy-australia/about-the-organisation/annual-
report Retrieved on 21 January 2018
Liu, Y., Li, X., Zeng, H., & An, Y. (2017). Political connections, auditor choice and corporate
accounting transparency: evidence from private sector firms in China. Accounting &
Finance, 57(4), 1071-1099.
Maas, K., Schaltegger, S., & Crutzen, N. (2016). Integrating corporate sustainability assessment,
management accounting, control, and reporting. Journal of Cleaner Production, 136,
237-248.
Ni, A., & Van Wart, M. (2015). Corporate Social Responsibility: Doing Well and Doing Good.
In Building Business-Government Relations (pp. 175-196). Routledge.
Schaltegger, S., Burritt, R., & Petersen, H. (2017). An introduction to corporate environmental
management: Striving for sustainability. Routledge.
Seas, C. (2019). ASX releases | Clean Seas. Retrieved from
http://www.cleanseas.com.au/investors/asx-releases/ Retrieved on 21 January 2018
Watson, L. (2015). Corporate social responsibility research in accounting. Journal of Accounting
Literature, 34, 1-16.
32

33