Deferred Tax Analysis of BHP Billiton Company

WOolworth COmpany
Corporate Accounting
Deferred Tax Analysis
Name of the author

Table of Contents
INTRODUCTION.................................................................................................................................2
ANSWER TO QUESTION NO- 1........................................................................................................2
ANALYSING INFORMATION PRESENT IN CASH FLOW STATEMENT................................2
ANSWER TO QUESTION NO- 2........................................................................................................3
OPERATING, INVESTING AND FINANCING ACTIVITIES: A SUMMARISED
EXPLAINATION..............................................................................................................................3
ANSWER TO QUESTION NO- 3........................................................................................................4
ITEMS REPORTED IN OTHER COMPREHENSIVE INCOME STATEMENT............................4
ANSWER TO QUESTION NO- (iv)....................................................................................................5
UNDERSTANDING OF EACH ITEM REPORTED IN OTHER COMPREHENSIVE INCOME
STATEMENT...................................................................................................................................5
ANSWER TO QUESTION NO- (v)......................................................................................................6
REASON OF NON-REPORTING OF THESE ITEMS IN STATEMENT OF PROFIT AND LOSS
...........................................................................................................................................................6
ANSWER TO QUESTION NO- (vi)....................................................................................................6
TAX EXPENSE OF BHP BILLITON...............................................................................................6
ANSWER TO QUESTION NO- (vii)...................................................................................................7
IS THE FIGURE OF TAX EXPENSE SAME AS ACCOUNTING INCOME MULTIPLIED BY
BHP BILLITON’S EFFECTIVE TAX RATE?.................................................................................7
ANSWER TO QUESTION NO- (viii)..................................................................................................9
COMMENT ON DEFERRED TAX ASSET OR LIABILITY..........................................................9
ANSWER TO QUESTION NO- (ix)....................................................................................................9
IS CURRENT TAX ASSET SAME AS INCOME TAX EXPENSE?..............................................9
ANSWER TO QUESTION NO- (x)....................................................................................................10
IS THE INCOME TAX EXPENSE SAME AS INCOME TAX PAID?.........................................10
ANSWER TO QUESTION NO- (xi)..................................................................................................10
Conclusion...........................................................................................................................................11
References...........................................................................................................................................12
Appendix.............................................................................................................................................14

INTRODUCTION
With the changes in economic conditions each and every organization needs to comply with
the IFRS rules and accounting standards. In this report, BHP Billiton Company has been
selected which reflects all the key points and tax compliance program of company. This
report focuses on the cash flow statement analysis, income statement analysis and recording
of the deferred tax in the books of account of Company. In this report, analysing information
present in cash flow statement and its comparison with the recording of the income statement
has been done. After that, recording of the deferred tax assets and income tax payment will be
analyzed as per the AASB 112 and accounting rules and regulations.
ANSWER TO QUESTION NO- 1
ANALYSING INFORMATION PRESENT IN CASH FLOW STATEMENT
It is analyzed that cash flow statement is the document which is accompanied he reason of
preparing the cash flow statement is to understand the cash movements prevailing in the
business, as the income statement is prepared on accrual basis. So, it becomes difficult to
understand that whether the incomes that are reported have been actually received or not, and
whether the expenses shown are actually paid or not. Cash flow statement shows the
movement of cash without giving any regards to the year of accrual. Any transaction that
reported cash inflow or outflow is reported. The cash flow statement of the BHP Billiton
Company has shown high cash outflow from eh investing activities and payment of dividend
to shareholders (Appiagyei, Djajadikerta , and Xiang, 2016).
It has been observed that that dividend paid recorded in the cash flow statement of the
company in 2017 is US $ US$ 636 million which is 100% higher as compared to the 2016
data i.e. US $ 301 million.
The expenditure of BHP Billiton has been reduced to US$ 6946 million in financial year
2016 to US$ 4252 in financial year 2017 (Miller, and Skinner, 2012).
.

ANSWER TO QUESTION NO- 2
OPERATING, INVESTING AND FINANCING ACTIVITIES: A SUMMARISED
EXPLAINATION
US$ IN MILLION 2016-17 2015-16 2014-15
Net cash provided or used by operating
activities
16,804 10,625 19,296
Net cash provided or used in investing
activities
(4,161) (7,245) (13,154)
Net cash provided or used in financing
activities
(9,133) 284 (8,276)
It is analyzed that the net operating cash flow from its busienss has been up and resulted to
US$ 16804 million in 2017 which is 20% higher as compared to last year data.
The receipt investment and amount of cash inflow from operating activities has also gone
down by 22% as compared to last year data (Landoni, and Zeldes, 2018).
The expenditure made of the investing activities of company has been decline since over last
year data. The main reason behind the reduction in the expenditure was related to the last
year cash outflow for buying plants and machineries for the company.
Company invested its cash in several assets such as purchase of property, equipment, plants
and other asset to expand the busienss in long run (Appiagyei, Djajadikerta , and Xiang,
2016).
BHP has also invested its capital in buying and acquisition of the new assets in other units
which have resulted to high cash outflow from its business.