Contents Introduction.................................................................................................................................................3 Cash Flow Statement...................................................................................................................................4 Other Comprehensive Income Statement....................................................................................................7 Corporate Taxes..........................................................................................................................................8 Conclusion.................................................................................................................................................10 Bibliography...............................................................................................................................................11 Appendix...................................................................................................................................................12 2
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. 3
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 FromItemsDescription Operating ActivitiesReceipts from customersThese are the receipts which arereceivedfromthe customers for the purchase of materials. Paymentstosuppliersand employees The payment to the employees isthesalariestothe employeesfortheir contribution and payment are also made to the suppliers for acquiringtheproducts (Kennon, 2018). Payment of purchase of landThe payment which is made by the organization so as to purchase the land. Interest and other finance cost paid Itistheamountwhichis charged for and of the funds which are taken as the lent. Distributionofdividends received from associates and joint ventures Thedividendwhichis received is distributed to the shareholdersofthe organization(Course, 2018). Interest ReceivedIt is the amount that has been earned by the organization but yet to be received in the form of cash. Income tax paidThetaxeswhicharepaid everyyearaccordingtothe taxation rules. Investing ActivitiesPayments for property, plant and equipments Thepaymentsmadebythe organizationforpurchasing the property, equipments and the plant(Merritt, 2018). Paymentsfor investmentsin associates Thepaymentsmadefor purchasingthefinancial 4
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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 partiesThe payments which are made for taking the loans from the parties. Repaymentsofloansby related parties Theloanisrepaidtothe lender of the loans from which the loans are taken. Financing ActivitiesDividendspaidtogroup shareholders These are the dividends which are paid by the organization to itsshareholders(Limited, 2018). Repayment of borrowingsThe payment has been made againfortheborrowings whicharedonefor organization(Limited, 2018). Proceeds from borrowingsThe 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. Repaymentofconvertible notes The repayment is done for the notes can be convertible to the done to the domestic currency (Limited, 2018). Transactionwithnon controlling interests Thetransactionswhichare 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 5
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). 6
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). 7
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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 bothorganization 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 thelegal 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 thetaxation rules while the tax expenses are 8
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). 9
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. 10
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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. 11
Appendix For 2015-16 Income Statement Balance Sheet 12
Change in Equity 13
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