This assignment presents an income statement with five years of data, detailing various line items such as Sales, General & Administrative Expenses, Other Operating Expenses, Interest Expense, and Net Income. It requires the user to analyze this information to understand the company's financial performance over time.
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RUNNING HEAD: Implication of taxation rules and regulations on Monash IVF Group Ltd 1 Name of the student- Topic- Implication of taxation rules and regulations on Monash IVF Group Ltd University name
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Implication of taxation rules and regulations on Monash IVF Group Ltd 2 Table of Contents Answer to question-1.............................................................................................................................3 Answer to question-2.............................................................................................................................5 Answer to question no-3........................................................................................................................5 Answer to question no-4........................................................................................................................7 Answer to question no-5........................................................................................................................8 Answer to question no-6........................................................................................................................9 Answer to question no-7........................................................................................................................9 References...........................................................................................................................................12 .
Implication of taxation rules and regulations on Monash IVF Group Ltd 3 This report has focused on evaluating taxation rules and regulations of Monash IVF Group Ltd. Answer to question-1 The annual report of Monash IVF Group Ltd has been analysed with a view to evaluate the stock and contributed capital of company ï‚·Common stock ï‚·Contributed capital ï‚·Accumulated profit ï‚·Retained earnings and reserve. It is observed that common stock is the amount of money given by shareholders for the ownership. On the other hand, Contributed capital is also the same amount but not redeemable unit and unless company is wind up. Accumulated profit is the overall profit collected by the company since then. Retained earnings and reserve is the amount of profit which has not distributed by company to its stakeholders (Blouin and Robinson, 2014). Equity (Amount in dollar million) ($M) 20172016 Common stock428423
Implication of taxation rules and regulations on Monash IVF Group Ltd 4 Accumulated profit(113)(104) Retained earning161161 Total equity287288 Discussion on the retained earning Company has maintained stable retained earnings in both years. However, the main objective of not plugging back of this capital in its business is based on the return on capital employed of company.Monash IVF Group Ltd is not finding a good reason to expand its business as company is having sluggish market conditions. Answer to question-2 It is considered that tax is the amount which is charged on the profited of company. Monash IVF Group Ltd has paid tax amount AUD $ 12 million. Company has Monash IVF Group Ltd has maintained stable tax payment since last two year which is good indicator for company (Brondolo, 2009) Particular(AUD $ in million)20152016 Income tax expenses1212 Company has to adopt proper tax planning process with a view to reduce the tax payment. In addition to this, company has increased deferred tax liabilities by AUD $ 1 million.
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Implication of taxation rules and regulations on Monash IVF Group Ltd 5 Answer to question no-3 After evaluating the annual report of Monash IVF Group Ltd, it is observed thattax expenses shown in the books of account of company is not same as the amount computed by charging 30% tax on the profit of company. It is considered that Monash IVF Group Ltd has paid tax AUD $ 12 million. On the other hand, if tax rates time tax payment is computed it would be around 30% % net profit i.e. 41* 30%= AUD 12.3. However, this is very less amount of tax differences. It has aroused due to difference between the accounting and taxation rules and regulations (Monash IVF Group Ltd, 2017) Explain why this ï‚·It is considered that treatment of charging tax on the earned profit is different in accounting and income tax rules and regulations. ï‚·The tax expenses shown in the financial statement of company would be based on the income tax rules and regulations. On the other hand, tax rate computed on the net profit would be based on the profit computed as per the rule and regulations. There are main two reasons of differences. First is related to recording of revenue and expenses in profit and loss account as per the accounting and income tax rules and regulations. As there is different recording of expenses and revenue, such as charging depreciation, recording donation and bad debts as per the accounting and income tax rules and regulation as per AASB-122. Answer to question no-4 The annual report of Monash IVF Group Ltd has shown that it has recorded deferred tax liabilities amount AUD $ 2 million in its non-current liabilities.This deferred tax amount
Implication of taxation rules and regulations on Monash IVF Group Ltd 6 needs to be recognized and carried forward to the extent that is reasonably sufficient for the future taxable income.It is analysed that Monash IVF Group Ltd has paid lower tax as per its income tax rules and regulation as compared to its tax computation based on the accounting rules. .therefore, payment beyond that has been kept at the deferred tax liabilities. It reflects that company may need to pay this tax payment in future if taxation rules and regulations policies changes (Brigham and Ehrhardt, 2013). On the other hand, if Monash IVF Group Ltd pays higher tax as per the income tax rules as per the accounting rules and regulations then it needs to charge in its books of account of company. Particular (AUD $ million)20172016 Deferred tax assets21 Answer to question no-5 Current tax assets and other income tax payable by company With the ramified changes in taxation rules and regulations, company needs to book taxation payment entries in its books of account to keep the record of the tax payment. In Monash IVF Group Ltd, company was having AUD $ 10 million tax payable which it has recorded in its current liabilities section. It reflects that company may need to pay current tax to government in near future (Gitman, Juchau and Flanagan, 2015). Deferred tax payment of Monash IVF Group Ltd in 2017 is zero. Company has paid all of its deferred tax to government AUD $ 10 million in 2016.
Implication of taxation rules and regulations on Monash IVF Group Ltd 7 Particular(AUD $ in million)20162017 Income tax payable100 Why income tax expenses is not same as the income tax payable It is evaluated that income tax payable of company was AUD $ 10 million in 2016 which has gone down to zero. It is the amount of tax which would be payable by Monash IVF Group Ltd in near future. On the other hand, income tax expenses are the amount charged on the profit and loss account of company and would be deducted from its net profit. Income tax payable includes all the tax payment including for all the years. In addition to this, income tax expenses are the charged only on the current year profit of company. Answer to question no-6 Is the expenses shown in the income statement is not same as the income tax paid in its cash flow statement? If not After evaluating the annual report of Monash IVF Group Ltd, it is considered that income tax expenses shown in the income statement is not same as the income tax paid in its cash flow statement (Evers, Meier, and Spengel, 2014). Why are the differences? Cash flow statement reflects the cash inflow and outflow of money in the current year irrespective of the fact that it relates to current year or previous year. The cash flow of income tax reflects the tax payment of company irrespective of the fact that it relates to current year or previous year. The income tax shown in the cash flow statement is zero. It
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Implication of taxation rules and regulations on Monash IVF Group Ltd 8 reflects that in current year company has paid zero amount of tax. On the other hand, income tax expenses shown in the profit and loss account is the amount of tax charged on the profit and loss account. The current tax expenses of Monash IVF Group Ltdis AUD $ 12 million. Now inthe end, it could be inferred that each and every statement of company has its own recording process and values. These documents serve their own particular objects. There is zero amount of tax payment in the current year of Monash IVF Group Ltd. Therefore, there is no amount shown in the cash flow statement of company. Answer to question no-7 Treatment of recording of tax in the books of account ofMonash IVF Group Ltd Interesting thing about the recorded its entire tax amount Recording of income tax in the books of account of company is based on the taxation rules and regulations given under AASB-112. It is considered that entries for tax recording are done in the profit and loss account, balance sheet and cash flow statement. The main interesting thing about the recording of tax is related to contradiction of tax computation as per the accounting rules and regulations and taxation rules and regulations (Monash IVF Group Ltd, 2017). Surprising thingabout the recorded its entire tax amount The main surprising thing about recording of tax in the books of Monash IVF Group Ltd is related to corporate governance recording and income tax rules. Company needs to block high amount in its deferred tax liabilities in case its tax computation is low as per the accounting rules while comparing the same with the taxation rules. In addition to this,
Implication of taxation rules and regulations on Monash IVF Group Ltd 9 Monash IVF Group Ltd can never have deferred tax assets and deferred tax liabilities at the same. Difficulty in recorded the entire tax amount Monash IVF Group Ltd has complex tax recording structure. The main problem arise when the income tax expenses is not same as per the tax rate income computation of company. Monash IVF Group Ltd has found difficult to bifurcate tax payment as per the rule and regulation given under AASB-112. New insight about the company account for the income tax The main insight about the recording of tax in the books of account is related to changing taxation rules and regulations. Company needs to be ready and alert for the taxation rules and regulation. Company might face cumbersome and complicated process while recording of taxation rules and regulation in its books of account.
Implication of taxation rules and regulations on Monash IVF Group Ltd 10 References Ballas, A.A., Skoutela, D. and Tzovas, C.A., 2010. The relevance of IFRS to an emerging market: evidence from Greece.Managerial Finance,36(11), pp.931-948. Blouin, J.L. and Robinson, L.A., 2014. Insights from academic participation in the FAF's initial PIR: The PIR of FIN 48.Accounting Horizons,28(3), pp.479-500. Brigham, E.F. and Ehrhardt, M.C., 2013.Financial management: Theory & practice. Cengage Learning. Brondolo, J., 2009.Collecting taxes during an economic crisis: challenges and policy options(No. 2009-2017). International Monetary Fund. Evers, M.T., Meier, I. and Spengel, C., 2014. Transparency in Financial Reporting: Is Country-by-Country Reporting suitable to combat international profit shifting?. Gitman, L.J., Juchau, R. and Flanagan, J., 2015.Principles of managerial finance. Pearson Higher Education AU. Monash IVF Group Ltd, 2017, annual report, Retrieved on 22stJanuary, 2017 from http://ir.monashivfgroup.com.au/Investor-Centre/?page=Annual-Reports
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Implication of taxation rules and regulations on Monash IVF Group Ltd 11 Appendix MONASH IVF GROUP LTD (MIS) Cash Flow Flag BALANCE SHEET Fiscal year ends in June. AUD in millions except per share data. 2013- 06 2014- 06 2015- 06 2016- 06 2017- 06 Assets Current assets Cash Cash and cash equivalents91084 Total cash91084 Receivables3345 Other current assets3456 Total current assets15171815 Non-current assets Property, plant and equipment Gross property, plant and equipment27364045 Accumulated Depreciation-18-21-25-29 Net property, plant and equipment9141517 Equity and other investments101 Goodwill198229229229 Intangible assets22222526 Deferred income taxes30 Other long-term assets0000 Total non-current assets232267270272 Total assets246284288287 Liabilities and stockholders' equity Liabilities Current liabilities Short-term debt0 Accounts payable1244 Deferred income taxes13100 Other current liabilities22272321 Total current liabilities24323625 Non-current liabilities Long-term debt951069595 Deferred taxes liabilities12 Other long-term liabilities2112 Total non-current liabilities971089699 Total liabilities122140133124 Stockholders' equity Common stock423428428428
Implication of taxation rules and regulations on Monash IVF Group Ltd 12 Retained earnings-161-161-161-161 Accumulated other comprehensive income-137-123-113-104 Total stockholders' equity125144155164 Total liabilities and stockholders' equity246284288287 Income statement MONASH IVF GROUP LTD (MIS) Cash Flow Flag INCOME STATEMENT Fiscal year ends in June. AUD in millions except per share data. 2013- 06 2014- 06 2015- 06 2016- 06 2017- 06 TT M Revenue114122157155155 Cost of revenue1113141313 Gross profit103109142142142 Operating expenses Sales, General and administrative5359787979 Other operating expenses2817181818 Total operating expenses8177979898 Operating income2232454545 Interest Expense255533 Other income (expense)13000 Income before taxes-231414141 Provision for income taxes-79121212 Net income from continuing operations521293030 Other-2 Net income321293030 Net income available to common shareholders321293030 Earnings per share Basic0.020.090.120.13 0.1 3 Diluted0.020.090.120.13 0.1 3 Weighted average shares outstanding Basic126231235235235 Diluted126231235237237 EBITDA2639504949
Implication of taxation rules and regulations on Monash IVF Group Ltd 13