Solved Assignment on Accounting PDF

Running Head: Corporate Accounting
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Corporate Accounting
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Contents
Introduction.......................................................................................................................3
JB HI FI............................................................................................................................3
Cash flow statement..........................................................................................................3
Analysis on cash flow statement...................................................................................3
Comparative analysis....................................................................................................4
Comprehensive income statement....................................................................................5
Items of the comprehensive income statement.............................................................5
Understanding about the items.....................................................................................5
Reasons behind not adding it into income statement....................................................6
Accounting for corporate income tax...............................................................................6
Tax expenses.................................................................................................................6
Accounting income and taxation..................................................................................6
Deferred tax expenses...................................................................................................7
Current tax assets and liabilities...................................................................................7
Income tax in income statement and cash flow statement............................................8
Insight factor of the taxation system.............................................................................8
Conclusion........................................................................................................................9
References.......................................................................................................................10

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Introduction:
Accounting is a process which makes it easier for an organization to identify and
evaluate the accounting system, accounting standards, accounting recording system etc of the
company. The report explains about the evaluation on the financial statement of the company
and tax recording system of the company. It measures the different taxation figures of the
company to measure the recording system and the accounting regulations. The report has
been prepared to understand the taxation figures of the company. For this evaluation, JB HI
FI has been measured.
JB HI FI:
JB HI FI is an Australian company which is operating its business in retailing
industry. It retails the consumer good majorly the video games, CDs, DVDs etc. the company
has been founded in the year of 1974. The company is operating its business through 303
retail stores. The company has diversified its business at international market to measure and
enhance the performance of the company (Home, 2018).
Cash flow statement:
Cash flow statement is one of the main financial statements of the company which
measures the total cash position of the company. It evaluates the cash outflow and inflow of
the company on the basis of the operating activities, financial activities and the investing
activities of the company (Robinson, Stomberg and Towery, 2015).
Analysis on cash flow statement:
The cash flow statement of JB HI FI has been evaluated and it has been measures that
how many changes have occurred into the cash position of the company from the last year
and what are the factors due to which these changes have occurred. The operating activities
explains that the non cash items and the revenue have been improved in the company from
the last year and due to it, the operating cash flows of the company has been improved
(Morris, 2017).
The investment into the property, plant and equipment has impacted on the total cash
flow from investing activities. It has been identified that the changes have taken place due to
less investment into PPE. Further, the company has issued more common stock in the market

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in the year of 2017 as well as the dividend amount has also been increased. However, the
stock amount is higher and thus the cash flow from investing activities of the company has
been improved (Annaul report, 2017).
JB HI FI LTD (JBH) Statement of CASH FLOW
Fiscal year ends in June. AUD. 2015-06 2016-06 2017-06
Non cash items
-
42466000 5955000 395900000
Investments in property, plant, and
equipment
-
42466000
-
52343000 -49100000
Common stock issued 3125000 5955000 395900000
Cash dividends paid
-
87174000
-
93205000
-
119100000
Other financing activities -484000 -90000 -1700000
(Monrinsgtar, 2018)
Comparative analysis:
The cash flow statement of JB HI FI has been compared with the cash flow statement
of last 3 years. On the basis of the cash flows statement of 2015, 2016 and 2017, it has been
found that the operating cash flows of the company have been improved in last 3 years. The
main reason behind the improvement is higher revenue of the company and less cost of
revenue.
In addition, the investing cash flow of the company has been measured and it ahs bee
found that the cash outflow of the company has been higher due to huge investment into the
PPE and the ore cash outflow in the acquisition process (Ho, 2017).
Moreover, the financing activities of the company has been measured and it has been
found that the net cash flow from financing activities have been enhanced due to issue of
common stock in the company.
JB HI FI LTD (JBH) Statement of CASH FLOW
Fiscal year ends in
June. AUD.
2015-06 2016-06 2017-06
Cash Flows From
Operating
Activities
-42466000 5955000 395900000
Net cash used for
investing activities
-44370000 -52001000 -885500000
Net cash provided
by (used for)
-129640000 -130565000 715900000

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financing activities
Net change in cash -174210000 -182387000 -169700000
Free cash flow 137430000 132797000 141500000
On the basis of the study, it has been recognized that the net cash flow and free cash
flow of the company explains about the better financial position of the company. It explains
that the company has improved the cash flow position (Gorry, Hassett, Hubbard and Mathur,
2017).
Comprehensive income statement:
Comprehensive income statement is a statement which describes about those income
and expenses of the company which cannot be recorded into the financial statement of the
company (Eberhartinger, Genest and Lee, 2017).
Items of the comprehensive income statement:
In the annual report of JB HI FI, comprehensive income statement has been identified
and it has been found that the other comprehensive income of the company is $ 171.2 which
has been improved from $ 156.2 million. It has been found that the main items of
comprehensive income statement of the company are changes in the fair value and exchange
differences. It has lead to the profitability position of the company to downwards. On the
basis of the annual report (2017), it has been found that the profitability position of the
company has been lower due to comprehensive income statement.
Figure 1: Comprehensive income statement
(Annual report, 2017)

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Understanding about the items:
The annual report (2017) explains that the comprehensive income figures of the
company are those items which are not related to the daily functions and the operations of the
company. These items are the external factors related to the market and the country and
impacts on the total profitability level of the company. The company has recorded all these
data separately in the annual report of the company.
Reasons behind not adding it into income statement:
The main reason behind not involving these items and their figures into the income
statement of the company is that it is not related to the daily functions and the operations of
the company (Eberhartinger, Genest and Lee, 2017). These factors affects the net profit of the
company without involving into the operations of the company and the accounting recording
regulations, only those items could be added into the income statement of the company which
is related to the operations of the company.
Accounting for corporate income tax:
Corporate income tax of the company has been evaluated further. It is the liability
amount of the comapny towards the government of the company. This amount is paid by the
company to the country’s government as liability amount towards the society and the
government of the company (Bardley, 2007).
Tax expenses:
The tax expenses of the company have been evaluated on the basis of the annual
report of the company and it has been found that the tax expenses of the company have been
lowered from 2016 in 2017. The tax expenses of the company have been lowered due to the
higher interest expenses and the effective tax planning of the company.
Particulars (AUD $ in millions) 2016 2017
Income tax expenses 86.8 65.6
Accounting income and taxation:

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Further, the taxation rules brief that the taxation amount is the liability which is paid
by the company to the government on the basis of the accounting profit of the company. The
taxation amount of the company of the company is $ 65.6 million whereas the accounting
profit of the company is $ 259 million so the taxation amount of the company is 77.7 million
($ 259 million *30%). It explains that there is huge difference among the taxation amount and
the accounting profit of the company (Brigham and Ehrhardt, 2013).
These differences have occurred into the JB HI FI due to the items which are included
in the income statement of the company but it is exempted in the Australian taxation system
of the company. The changes have also occurred due to deferred tax liabilities and current tax
payable of the company.
Deferred tax expenses:
Deferred tax expenses are those figures which explain about the different payment
than the actual payment of taxation. If the accounting taxation is higher than the paid amount
than the difference amount is deferred tax liabilities and vice versa. The annual report (2017)
of the company explains that the deferred tax liabilities of the company have taken place in
the performance of the company (Tran, 2015). It has been higher due to less payment of
taxation.
Particular (AUD $ million) 2017 2016
Deferred tax liabilities 8.2 0
The deferred tax liabilities explain that the deferred tax liabilities of the company
have been enhanced and it explains that the company has to pay more amounts to the
government of the company (Pawsey, 2016).
Current tax assets and liabilities:
Current tax liabilities and current tax assets of the company explains about the amount
which has to be paid to the government of the Australia. The annual report (2017) explains

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that the current tax payable amount of the company is AUD $ 4.9 million in 2016 and $ 9
million in 2017 which explains about the decrement.
Further, the income tax payment explains that the income tax expanses of the
company has been improved and the company has not paid the entire amount to the
government so the amount has been stated in the annual report of the company as income tax
payable amount (Shantapriyan, O'Donnell, Streeter and Hicks, 2014).
Particular(AUD $ in
millions)
2016 2017
Income tax payable 4.9 9
(Annual report, 2017)
Income tax in income statement and cash flow statement:
In addition, it has been found that the cash flow statement and the income statement
of the company explains about the different taxation amount of the company. It briefs that the
taxation amount in the cash flow statement of the company is $ 98.5 million whereas the
income tax payment of the company in the income statement of the company is $ 65.6
million (Glasson, Therivel and Chadwick, 2013). It explains that the amount paid by the
company is higher than the amount stated in the income statement of the company.
It explains that the income tax payment stated in the income statement of the company
is related to the revenue expenses of the company and it only explains about the current year
only. However, in case of cash flow statement, it has been found that the income tax expenses
of cash flow statement is related with the total expenses of the company irrespective of the
years.
It explains that the company has paid higher amount to the government as tax amount
than the expected amount. It includes the last year debt amount of the company as well. It
explains that the company has paid the current year tax amount as well as past year tax
amount to the government of the country.
Insight factor of the taxation system:

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Further, on the basis of the above study, I have found that the study was surprising,
interesting, confusing as well as bit difficult. The interesting things about the study were the
taxation rules, accounting standards and the regulations which have been followed by the
company to charge the taxation amount. The company could be tough for the accountant to
measure the current taxation amount of the company (Garrett, Hoitash and Prawitt, 2014).
Further, the main surprising thing about the report was the different figures and the
items of the taxation which has been presented by the company in an effective way in the
annual report. The taxation figures of the company could be easily identified and evaluated
from the annual report of the company.
In addition, the difficult part of the report is to measure the taxation amount of the
company. There are various taxation items and figures such as deferred tax liabilities, current
tax liabilities etc of the company which is difficult to understand and evaluate.
Conclusion:
On the basis of annual report (2017) of JB HI FI and various books study, it has been
measured that the JB HI FI has followed the IFRS, AASB and other international rules to
follow the performance and the position of the company. the taxation system of the company
is quite better and explains that the accountant of the company has recorded all the figures
and data in better manner in the company.

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References:
Annual report. 2018. JB HI FI. [online]. Available at:
https://www.jbhifi.com.au/Documents/2017%20Annual%20Report.pdf (Accessed 23/5/18).
Bradley, S., 2017. Inattention to Deferred Increases in Tax Bases: How Michigan Home
Buyers Are Paying for Assessment Limits. Review of Economics and Statistics, 99(1), pp.53-
66.
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice.
Cengage Learning.
Eberhartinger, E., Genest, N. and Lee, S., 2017. Practitioners’ Judgment and Deferred Tax
Disclosure: A Case for Materiality.
Garrett, J., Hoitash, R. and Prawitt, D.F., 2014. Trust and financial reporting quality. Journal
of Accounting Research, 52(5), pp.1087-1125.
Glasson, J., Therivel, R., and Chadwick, A., 2013. Introduction to environmental impact
assessment. Routledge.
Gorry, A., Hassett, K.A., Hubbard, R.G. and Mathur, A., 2017. The response of deferred
executive compensation to changes in tax rates. Journal of Public Economics, 151, pp.28-40.
Ho, A.T., 2017. Tax-deferred saving accounts: Heterogeneity and policy reforms. European
Economic Review, 97, pp.26-41.
Home. 2018. JB HI FI. [online]. Available at: https://www.jbhifi.com.au/ (Accessed 23/5/18).
Morningstar. 2018. JB HI FI. [online]. Available at: http://financials.morningstar.com/cash-
flow/cf.html?t=JBH&region=aus (Accessed 23/5/18).
Morris, J.L., 2017. Classification of Deferred Tax Assets and Deferred Tax Liabilities: An
Evaluation of FASB's Attempt at Standards Simplication. Journal of Accounting and
Finance, 17(8), pp.198-208.
Pawsey, N., 2016. Project: Review of IFRS adoption in Australia.

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Robinson, L.A., Stomberg, B. and Towery, E.M., 2015. One size does not fit all: How the
uniform rules of FIN 48 affect the relevance of income tax accounting. The Accounting
Review, 91(4), pp.1195-1217.
Shantapriyan, P., O'Donnell, K., Streeter, J. and Hicks, B., 2014. Getting it Right: Directors’
Assessment of Information.
Tran, A., 2015. Can taxable income be estimated from financial reports of listed companies in
Australia?. Browser Download This Paper.