HI5020 Corporate Accounting: Analysis of MMA Offshore Limited's Financial Statements

HI5020 Corporate Accounting
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Contents
Introduction.................................................................................................................................................3
Cash Flow Statement...................................................................................................................................4
Other Comprehensive Income Statement....................................................................................................7
Accounting for Corporate Income Tax........................................................................................................9
Conclusion.................................................................................................................................................11
References.................................................................................................................................................12
Appendix...................................................................................................................................................13
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Introduction
This report explains about the various taxes which are used in corporate. With that the items
which are listed in the cash flow are highlighted with that the other comprehensive income
statement items are also examined. The annual reports are analyzed so that the financial position
of the company can be determined. MMA Offshore Limited was established in 1989 and is listed
in Australian Securities Exchange on 1999. It is one of the largest service providers of marine in
the Asia Pacific Region. The company has also tried to expand its business in Middle East in
2015. It has over 1000 people who are serving to as a diversified in its operations so that the
quality of service can be provided. The report also depicts the analysis of the three years of cash
flow statement so that the performance of 3 years can be determined in the competitive market.
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Cash Flow Statement
I) The items which are listed in the cash flow statement of the MMA Offshore Limited
are described according to operating, investing and financing activities (Devos,
2012).
Operating Activities: These are those activities which provides the majority of cash flows and
helps in determining that whether the company is profitable or not. The items of the operating
activities are:
Receipt from customers: These are the receipts which are received from the customers for the
purchase of the products and services (MMA Offshore Limited, 2018).
Interest Received: This is the amount of the income which is received as interest for the
securities and the other form of product (Devos, 2012).
Payment to suppliers and employees: This is the amount which is paid to the suppliers for the
product and the employees for rendering services to the customers.
Income Tax received: The income tax which is received by the organization as income so that
the transparency can be maintained (MMA Offshore Limited, 2018).
Interest and other cost of finance paid: This is the amount which is paid by the customers for
the interest and the cost of finance.
Investing Activities: The amount which is received as returns for investing in the assets of the
organization in which the organization has invested.
Payment for plant, property and equipment: The payments which are made by the
organization for purchasing the property, plant and equipment (Dhaliwal, et. al., 2013).
Proceeds from sale of property, plant and equipment: These are the amount which is received
as income for the sale of those property, plant or equipment.
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Proceeds from sale of investment: These are the incomes which are received by the sale of the
investments in which the company has invested (MMA Offshore Limited, 2018).
Dividends received: The dividends are the amounts which are received by the organization as
dividends from the profits of the company (Dhaliwal, et. al., 2013).
Financing Activities: The financing activities are those from which the company raises the
capital through external sources.
Repayment of borrowings: The payment is made again for acquiring the borrowings for the
organization (Dhaliwal, et. al., 2013).
Financing fees on borrowings: This is the financing fees which are received by the organization
for borrowings purchased for organization.
Dividends paid: These are the amounts which are paid from the profits to the shareholders of the
organization.
Yes, the changes has been seen from the last year to this year as the dividends were paid to the
shareholders in 2016 but in 2017 the amount was not paid as in 2017 as the dividends to the
shareholders (MMA Offshore Limited, 2018).
II) The comparative analysis of the 3 consecutive years shows that there has been
various fluctuations on the cash flow from 2015 to that the 2017 (MMA Offshore
Limited, 2018). It can be seen that in 2015 the cash generated from the operating
activities was $185360 while that in 2016 it was 120174 which can be seen that there
has been decreased in the operating activities of the organization and it gain
decreased in 2017 and became negative to $6094 (Marchini and D’Este, 2015).
Therefore, the company does not have enough finances so that the operation of the
organization can go smoothly. While the income generated from the investing
activities in 2015 was $168335 and in 2016 it decreased to $133017 and in 2017 it
increased to $56991 so it can be seen that now the organization is achieving great
returns from the investment activities (MMA Offshore Limited, 2018). The cash
which was used in the financing activities in 2015 $87,419 and in 2016 it increased to
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$65,918 it became negative results and again in 2017 it again increased to $71049
which showed that the organization is much dependent upon the external sources to
fund its operations of the business (MMA Offshore Limited, 2018). So, it can be seen
that the organization showed much negative results as the organization does not have
enough funds to run its operations within the organization (MMA Offshore Limited,
2018).
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Other Comprehensive Income Statement
III) The items which are listed in the other comprehensive income statement of the MMA
offshore Limited are:
o Exchange differences on translation of foreign operations
o Reclassification of exchange differences on disposal of entities
o Gain/Loss on hedge of net investment in a foreign operations
o Gain on cash flow hedges
o Transfer of cash flow hedge gain to initial carrying amount of hedged items
IV) The explanation of the items which are listed in the other comprehensive income
statement of the MMA offshore Limited are:
 Exchange differences on translation of foreign Exchange: These are the differences
which have been occurred in the foreign exchange due to the change in the currencies of
the various countries. So, this lead to the differences in the exchange (Dhaliwal, et. al.,
2013).
 Reclassification of exchange differences on disposal of entities: These are the
reclassifications which are done so that the differences between the disposal entities can
be classified accordingly within the organization (Devos, 2012).
 Gain/Loss on hedges of net investment in foreign operations: These are the amounts
which are either earned or incurred as the losses due to the hedge of net investment in the
foreign operations so that the exchanges can be established (MMA Offshore Limited,
2018).
 Gain on Cash Flow Hedges: These are the gains which have been earned by the
organization due to the hedges of the cash flow within the organizational structure
(Dhaliwal, et. al., 2013).
 Transfer of cash flow hedges gain into initial carrying amount of hedge items: The
amount which has been gained is transferred to that of the initial carrying amount of the
items which are of hedges.
V) These items are not listed in the profit and loss statement as these items are not yet
realized once these items will be realized so they will be transferred to the income
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statement (Warren, 2016). The items in the comprehensive income statement are
those items which are not yet realized till the closing date of the accounting period.
The foreign transactions and the hedge of the cash flows are not realized till the
closing of the accounting period so these items are reported in the other
comprehensive income statement of the organization and not in the income or the
profit and loss statement of the organization (MMA Offshore Limited, 2018). This is
the basic difference between two of the statements of the financial accounts
(Dhaliwal, et. al., 2013).
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Accounting for Corporate Income Tax
VI) The tax expenses of the current year are the $1603. The tax expenses are considered
as the complex as they are treated differently in the financial statements according to
the GAAP and are considered as the expenses according to the policy of the taxation.
These are the expenses which are paid by the organization but are treated as the
income for the accounting period (Habanec and Bohušová, 2017). Therefore, these
are treated as the revenue expenses of the organization so that the current and the
deferred tax are considered in the balance sheet of the organization. These are also
treated as the liability for the organization so that the compliance can be attained by
reducing the non compliance activities within the organization (Warren, 2016).
VII) The statement is true that the tax rates of the organization are same as that of the
accounting income of the organization. These are same as the taxes are the one which
is paid by every individual as well as the corporate (Habanec and Bohušová, 2017).
The organizations or the individuals who pay the taxes which are treated as the
effective tax rates (Muthuvelan, 2015). The individuals tax rates are the one which is
treated as the assessable income from the income of the customers but the corporate
pay the taxes according to the assets and the liabilities of the corporate so that the
taxes can be paid and effectiveness can be attained within the organizational structure
by paying the taxes (Habanec and Bohušová, 2017).
VIII) The deferred tax is considered as the differences between the amounts which are
carrying in the assets and the liabilities according to the financial statements and taxes
which are corresponding based upon the computation of the tax profits (Habanec and
Bohušová, 2017). These are recognized in the profit and the losses when those items
are related with the recognition of the comprehensive income directly or indirectly
(MMA Offshore Limited, 2018). The deferred tax liabilities are recorded by the
organization in the year 2016 but it was not recorded in 2017. The current tax assets
are set off with that of the current tax liabilities which are related with the income tax
levied on the income of the individual or organization (Marchini and D’Este, 2015).
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IX) The income taxes paid are not recorded by the organization but the income tax
benefits are recorded by the organization which will help the organization in bringing
the transparency within the organizational structure (Warren, 2016). The amount of
the income tax paid are not same as that of the tax expenses as the tax expenses are
the income for the accounting and are recorded in the financial statements according
to the accounting standards and the income tax payables are the obligations for the
organization which are to be paid so that the overall profitability of the organization
can be increased and the accountability can be maintained (Habanec and Bohušová,
2017).
X) No, the income taxes paid which are recorded in the cash flow statement are not same
that of the income tax expenses which are recorded in the income statement (Warren,
2016). There occurs the difference both the statements as the tax paid shows the
outflow of the cashes from the financial statements of the organization. While the
income tax expenses are the incomes for the organization according to the accounting
standards so these are treated in the income statement of the organization (Warren,
2016). Therefore, this is only one of the differences between recordings of both the
transactions in the financial statements of the organization (Marchini and D’Este,
2015).
XI) The surprising thing about the treatment of the taxes is that the income tax payables
re not recorded by the organization while the organization has recorded the income
tax benefits of the organization (Warren, 2016). With that there is the transparency
within the tax treatment of the organization as all the taxes are clearly shown by the
organization in their financial accounts.
The difficulty about the treatment of the taxes is that there has been the complexity in the
transactions of the financial statements (Marchini and D’Este, 2015). With that there has
been the difference between the treatments of all the taxes so it was difficult to understand
that why these transactions are recorded in the various different statements and what are its
implications so that the accountability can be maintained within the organization (Marchini
and D’Este, 2015).
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Conclusion
It can be stated that the taxes of the organization are clearly examined so the understanding of
the taxes has been gained which will help in attaining the accountability and the transparency
within the organizational structure of the organization. With that the items of the cash flows are
explained so that the activities of the cash flows can be determined and the other comprehensive
income statement are also revealed. The difference between the treatment of the taxes within
various statements are also determined which showed the transparency of the organization while
recording the financial transactions. So, It can be concluded that the report overall gave the
understanding of various statements with that of the treatment of the taxes in their respective
accounts so that the accountability and the transparency can be maintained within the
organization.
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References
 Devos, K., 2012. The impact of tax professionals upon the compliance behaviour of
Australian individual taxpayers. Revenue Law Journal, 22(1), p.31.
 Dhaliwal, D.S., Kaplan, S.E., Laux, R.C. and Weisbrod, E., 2013. The information
content of tax expense for firms reporting losses. Journal of Accounting Research, 51(1),
pp.135-164.
 Habanec, P. and Bohušová, H., 2017. Comparison of Deferred Tax Materiality Reporting
in Accordance with Continental and Anglo-Saxon Reporting System. Acta Universitatis
Agriculturae et Silviculturae Mendelianae Brunensis, 65(6), pp.1917-1924.
 Marchini, P.L. and D’Este, C., 2015. Comprehensive Income and Financial Performance
Ratios: Which Potential Effects on RoE and on Firm's Performance Evaluation?.
Procedia Economics and Finance, 32, pp.1724-1739.
 MMA Offshore Limited, 2018. Financial Reports. [Online]. MMA Offshore Limited.
Available at: https://www.mmaoffshore.com/investor-centre/financial-reports. [Accessed
On 25 May 2018]
 Muthuvelan, M., 2015. A STUDY ON CASH FLOW ANALYSIS IN M/S.
PANTALOON RETAIL (INDIA) LIMITED. International Journal of Management
Research and Reviews, 5(5), p.315.
 Warren, N., 2016. E-filing and compliance risk: Evidence from Australian personal
income tax deductions. Austl. Tax F., 31, p.577.
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Appendix
2015-16
Income Statement
Balance Sheet
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Change in Equity
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Cash Flows
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For 2016-17
Income Statement
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Balance Sheet
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Change in Equity
18

Cash Flows
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