HI5020 Corporate Accounting: Analyzing Peet Group Limited's Financial Performance

HI5020 Corporate Accounting
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Contents
Introduction.................................................................................................................................................3
Cash Flow Statement...................................................................................................................................4
Other Comprehensive Income Statement....................................................................................................7
Corporate Taxes..........................................................................................................................................8
Conclusion.................................................................................................................................................10
Bibliography...............................................................................................................................................11
Appendix...................................................................................................................................................12
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Introduction
The main aim of the report is to analyze the financial performance of the organization and gain
the knowledge about the financial statements that how the transactions are recorded and what are
its implications. With this the various items which are recorded in the cash flow statement are
also determined and the understanding about the each item is also depicted. The various types of
the taxes which are used by the organizations are also examined so that the practical knowledge
about the treatment of the taxes can be gained. Peet Limited is taken for the analysis of the
overall report. Peet Limited is the organization who is operating in Australian real estate market.
It was founded in 1895 and the headquarters are based on Perth, Australia. The basic areas where
the Peet operates are the development of land for building new houses, the development of the
town houses and commercial real estate development.
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Cash Flow Statement
I) The cash flows statement shows all the transactions that impact the movement of the
cash in the economy. There are various items that may impact the inflow and the
outflow of the cash in economy such as:
Cash Flows From Items Description
Operating Activities Receipts from customers These are the receipts which
are received from the
customers for the purchase of
materials.
Payments to suppliers and
employees
The payment to the employees
is the salaries to the
employees for their
contribution and payment are
also made to the suppliers for
acquiring the products
(Kennon, 2018).
Payment of purchase of land The payment which is made
by the organization so as to
purchase the land.
Interest and other finance cost
paid
It is the amount which is
charged for and of the funds
which are taken as the lent.
Distribution of dividends
received from associates and
joint ventures
The dividend which is
received is distributed to the
shareholders of the
organization (Course, 2018).
Interest Received It is the amount that has been
earned by the organization but
yet to be received in the form
of cash.
Income tax paid The taxes which are paid
every year according to the
taxation rules.
Investing Activities Payments for property, plant
and equipments
The payments made by the
organization for purchasing
the property, equipments and
the plant (Merritt, 2018).
Payments for investments in
associates
The payments made for
purchasing the financial
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securities.
Proceeds from capital returns
The revenue which is received
by the organization from the
capital returns (Course, 2018).
Loans to related parties The payments which are made
for taking the loans from the
parties.
Repayments of loans by
related parties
The loan is repaid to the
lender of the loans from which
the loans are taken.
Financing Activities Dividends paid to group
shareholders
These are the dividends which
are paid by the organization to
its shareholders (Limited,
2018).
Repayment of borrowings The payment has been made
again for the borrowings
which are done for
organization (Limited, 2018).
Proceeds from borrowings The income which has been
received from the sale of those
borrowings.
Proceeds from issue of equity
securities
The earnings which has been
received to the organisation by
the issue of shares.
Proceeds from issue of Peet’s
bond
The income received from the
issue of bonds which are of
Peet’s.
Repayment of convertible
notes
The repayment is done for the
notes can be convertible to the
done to the domestic currency
(Limited, 2018).
Transaction with non
controlling interests
The transactions which are
made for the interests that are
non controlling.
The change was seen in the financing activities from the preceding year to the current year that
there are various items which were missing such as the proceeds from the issue of the equity and
the bonds and the repayment for the convertible bonds. This shows that the company has not
opted for any of the external sources so as to raise its capital.
II) The comparative analysis is done of the Peet Group Limited by comparing the items
of the cash flows so that the knowledge about the movement of the transactions can
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be gained (Kennon, 2018). For the practical implementation the annual report of 2016
and the 2017 has been considered.
It can be evaluated that the operating activities of the organization in 2015 was $113300
which decreased in 2016 and was $17235 and it has increased in 2017 which amounted to be
$57227. So, it can be said that the company has various sources through which the operations
of the organization can go accordingly (Limited, 2018). When the analysis of the investing
activities was done it can be analyzed that the returns from the investment in 2015 was $ -
51699 and in 2016 it was $9027 and in 2017 as $1488 which shows that the results were
gained good in 2016 from last 3 years. The amount f the financing activities was $42661 in
2015 while in 2016 as $8012 and in 2017 it amounted to be -$40475 so it can be said that the
organization is much dependent upon the external sources for its daily operations (Limited,
2018).
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Other Comprehensive Income Statement
III) The items included in the other comprehensive income statement of the Peet Group
Limited are as follows:
 Realized losses on cash flow hedges transferred to profit and loss
 Unrealized gains/loss on cash flow hedges
 Share of other comprehensive income of associates
 Income tax relating to the components of other comprehensive income
IV) The other comprehensive income statement includes the various items in the annual
reports and all the items carry its own merits and demerits (Petro, 2014).
Realized losses on cash flow hedges: These are losses which have been occurred in the
hedges of the cash flows and they are transferred to that of the profit and loss accounts.
Unrealized gains/loss on the cash flow hedges: These are the gains or the losses which
have been incurred by the organization on the cash flow hedges and are yet to be realized
(Limited, 2018).
Share of other comprehensive income of associates: It is the shares of the associates which
are not realized till the accounting period are reported in this statement.
Income tax related to other income: These are the income taxes which are paid by the
organization and are related to the other income than the income reported in the income
statement of the organization (Limited, 2018).
V) The items which are recorded in the other comprehensive income statement cannot be
recorded in the income statement as these are the values of the organization or the
transactions which were not realized when the financial accounts were closing so
these are stated in the other comprehensive income statement other than the income
statement (Kennon, 2018). Once these items will be realized they will be reported in
the income statement but not of the current period but will be in the next year so that
the balance can be maintained as well as the transparency can be achieved in the
financial statements of the organization (Petro, 2014).
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Corporate Taxes
VI) The tax expense of the Peet Group Limited for the accounting period 2017 is $18163.
The tax expense is the expense which is reported in the corporate income statement as
the line item. It is the liabilities which is owned by the organization to the government
and are shown as the expenses in the financial statements of the organization (Petro,
2014).
VII) The amount of the tax expenses are not same as that of the tax rate times of the firm
as these are the rates which are shown in the financial accounts of the organization as
the taxes but these are those taxes which cannot be easily adaptable and acceptable
according to the various policies of the organization (Petro, 2014). The rate is termed
as the effective one when both organization as well as the individuals pays the taxes
according to the nominal rules and regulations determined by the government. So, it
can be said that the company does not reveals about the taxation rates applicable
within the organizational structure.
VIII) The company has recorded the deferred tax liabilities but not the deferred tax assets.
The amount of the deferred tax liability is $39698 (Limited, 2018). The deferred taxes
are recorded in the annual reports financial statements of the organization because
they show the differences which are temporary in nature for the rates of the taxes
which is applicable when the liabilities of the organisation are recovered and the
settlement of the assets are done by the organization (Merritt, 2018). The deferred tax
assets are recorded so as to set off the unused losses of the taxes and the authority for
the tax liability should be same for the particular period.
IX) Yes, the income tax is paid by the organization which is amounted to be $17952. The
income tax is the tax liability which has to be paid by every individual from its
income earned (Kimball, 2018). The amount of the tax payable is not same as that of
the tax expenses as the income tax payables are the legal responsibilities on the
individuals which have to be paid irrespective of the nature that the company is
earning profits or incurring losses. While the tax expenses are also the liability but in
the organisation it is treated as the earnings of the organisation (Course, 2018). The
income tax payables are calculated by the taxation rules while the tax expenses are
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according to the accounting standards so the difference between the two can be seen
and recorded separately in the different statement.
X) No, the tax expenses which are recorded in the income statement is not same as that
of the income tax payables which are recorded in the cash flow statements of the
organisation (Kimball, 2018). There is the reason behind the same that as stated
earlier that the organisations treats the income tax expense as the income for the
organisation but the payables are the responsibilities which are legal in nature so the
difference in their treatment occurs. The differences occur as they are various
statutory provisions due to which the amounts cannot be recorded equally in the
statements. The payment of the taxes is recorded in cash flow as this statement shows
the proper way through which the cash transactions of the organization can be
maintained and utilized (Kennon, 2018).
XI) While evaluating the treatment of the taxes in the report there were surprising as well
as the difficulties which were faced. The surprising was that the value for the
realization of the assets as well as the liabilities is not recorded by the organisation
while evaluating the amount of foreign exchange translation. The Peet Group Limited
also recorded the deferred tax liabilities but the value of the deferred tax assets were
not recorded by the organisaton (Kennon, 2018). With that the amount of the
operating activities included the GST amount but the GST paid was not separately
shown in the cash flow statement of the organization (Kimball, 2018). The difficulty
which was faced was that there are various taxes which were paid by the organisation
so while doing the evaluation there were the complexities which were faced. With
this it also gave the new insight that the profitability of the organisation can be
identified from the comprehensive statement of the incomes and the costs (Kennon,
2018). With that the treatment of the tax expenses and the tax paid are different was
also one of the new insight that was gained from the treatment of the taxes (Course,
2018).
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Conclusion
From the above discussion it can be concluded that the corporate pay various types of taxes but
the treatment and importance of all the taxes are different. There was fluctuations which were
seen in the cash flow statement of the Peet Group Limited but the organisation has enough
sources as it is raising its capital from external sources. The other comprehensive income
statement includes the values which are not yet realized and the corporate taxes are evaluated
which gave the better understanding about the treatment and the allocation of various taxes
within the organisation. Hence, it can be stated that the overall organization maintained the
transparency in their financial accounts so that the profitability can be achieved.
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Bibliography
 Course, A. (2018). What are Financing Activities. Accounting Course .
 Kennon, J. (2018). Interest and Expense on the Income Statement. The Balance .
 Kimball, T. (2018). Payroll Tax Expense vs. Payroll Tax Payable. Chron .
 Limited, P. (2018). Financial Reports. Peet Limited .
 Merritt, C. (2018). Tax Payable vs. Deferred Income Tax Liability. Chron .
 Petro, F. G. (2014). A Logical Approach to the statement of cash flows. American
Journal Of Business Education .
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Appendix
For 2015-16
Income Statement
Balance Sheet
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Change in Equity
13

Cash Flow Statement
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For 2016-17
Income Statement
15

Balance Sheet
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Cash Flow Statement
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