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Tax Assignment | Financial Statement Assignment

   

Added on  2020-05-16

17 Pages2837 Words55 Views
Running head: TAXTaxName of the Student:Name of the University:Authors Note:

TAX1Table of ContentsIntroduction:....................................................................................................................................2Discussion related to Items of equity and reason for change..........................................................2Tax expense provided in the financial statement:............................................................................3Accounting income and income tax expense:.................................................................................3Deferred tax assets and deferred tax liabilities:...............................................................................3Income tax payable and comparing with income tax expenses:......................................................6Income tax payment and income tax expense:................................................................................7Insights learned:...............................................................................................................................8Conclusion:......................................................................................................................................9Reference.......................................................................................................................................10Appendix 1:...................................................................................................................................12Appendix 2:...................................................................................................................................13Appendix 3:...................................................................................................................................14Appendix 4:...................................................................................................................................15

TAX2Introduction: In this report, an attempt is made to analyse the financial statement of FleetwoodCorporation. The Annual reports of the company contain all necessary information, financial aswell as non-financial, to assess the performance and position of an entity. However, it isimportant to have proper knowledge about different items in financial statements to understandthe actual implication of different items in the financial statements. The main aim of this reportis to critically analyse the significant areas related to movement in equity and tax expenses. Discussion related to Items of equity and reason for change Issued capital: Fleetwood Corporation has issued equity shares to the public to arrange the requiredamount of funds to finance the operations of the company. Issued capital represents that part ofthe capital which has been issued and subscribed by the shareholders of the company. The issuedcapital of the company is $195,079m for the financial year ending in 2016. Reserves: The company has created different reserves to be used for specific purposes. Thesereserves are not allowed to be used for distribution of dividend. Thus, these are not free reservesand are to be used only for specific purposes. The amount of reserves that the company has at theend of the financial year 2016 is $244m (Muller and Kolk 2015). Retained earnings: The company has retained earnings of $8,508m in the financial year 2016 that is theaccumulated balance of profit over the years. The balance of profit that have not been distributed

TAX3by the company neither transferred for any specific purposes to any reserves (Alstadsæter et al.2016). Tax expense provided in the financial statement: The company recorded current tax benefit in the income statement for the financial year2016 of $1531m as against a tax expense of $508m in the previous year 2015. Comparing the income tax expenses and the Accounting income: No, the current tax expense or benefit in this case is not similar to that of the tax ratemultiplied to the income of the company. In-fact the company incurred a loss from the businessoperations in the financial year 2016 (Dowling 2015). The reason for the difference is that thereare other tax items such as deferred tax assets, deferred tax liabilities, advance tax which areadjusted against the current tax liabilities to determine the amount of current tax expense orbenefit which is to be provided in the profit and loss account of an entity. Relationship between the deferred tax assets and liabilities: Fleetwood Corporation has showed a deferred tax asset of $14,121m in 2016 compared to$4,822m a year ago. No deferred tax liabilities have been reported by the company as thefinancial statement of the company only shows deferred tax assets. Though the company has not reported any deferred tax liabilities however, let us evaluatethe reasons for recording deferred tax assets and deferred tax liabilities by an entity in the

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