Analysis of Telstra Corporation's Cash Flow, Other Comprehensive Income Statement and Corporate Income Tax | HI5020

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HI5020 Corporate Accounting

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Contents
Introduction......................................................................................................................................3
Description of Telstra Corporations Limited...................................................................................3
Section 1: Cash flow Statement.......................................................................................................4
Section 1.1: Important items listed in cash flow statement of Telstra Corporation and
understanding of each item of cash flow statement.....................................................................4
Section 1.2: Comparative analysis of three main activities of cash flow statement and its
evaluation.....................................................................................................................................6
Section 2: Analyses of the other Comprehensive income statement...............................................7
Section 2.1: Items reported in other comprehensive income statement.......................................7
Section 2.2: Description of each of the items of other comprehensive income statement...........8
Section 2.3: Reason why the above items are presented in other comprehensive income
statement......................................................................................................................................8
Section 3: Accounting for Corporate Income Tax...........................................................................8
Section 3.1: Tax Expenses reported in the latest financial year...................................................8
Section 3.2: Difference between the accounting tax expenses as per fixed tax rate and tax
expenses shown in profit and loss account..................................................................................8
Section 3.3: Deferred tax assets and deferred tax liabilities reported in the balance sheet..........9
Section 3.4: Current tax assets or income tax payable as reported in the balance sheet............10
Section 3.5: Income tax expense and income tax paid..............................................................11
Section 3.6: Self learning from the accounting of taxes............................................................11
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

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Introduction
The financial statements developed by a business entity play a very critical role in
making significant decisions relating to its future expansion and growth. It depicts the financial
strength of an entity by providing an analysis of its major financial items such as assets,
liabilities and equity. The major financial statements that are developed by a business entity are
statement of profit and loss, balance sheet and cash flow statement. The business entities around
the world are required to develop and disclose their financial statements in their annual reports
and the relevant methods used for their preparation as per the international accounting standards.
The business entities operating within Australia also need to develop their financial statements as
per the international accounting standards. Australian business entities need to adopt the relevant
accounting standards of AASB for development and disclosure of their financial information.
In this context, the report has undertaken the analysis of financial statements and the
notes section of a public limited company listed on the ASX. The report has provided an analysis
of the cash flow statement of the selected company by providing an in-depth understanding of
each of its items such as operational, investment and financing activities. Also, it carries out an
analysis of the items reported in the income statement and also provides a discussion in relation
to the items that are not reported in the profit and loss statement of the company. In addition to
this, it also examines and evaluates the tax treatment provided in the latest financial statements of
the selected company. The company selected in this context is Telstra Corporations Limited a
recognized telecommunication entity in Australia listed on stock exchange.
Description of Telstra Corporations Limited
Telstra Corporation Limited is a recognized leading telecommunication and technology
company of Australia that is involved in providing telecommunication services within Australia
market. The company is involved in retail mobile, fixed voice and broadband services to its
consumers within Australia and at international level. The company by providing technology
efficient and content solutions has attained the position of largest and fastest mobile network
within the country. It is also actively involved in providing digital communication services to the
consumers of Australia. The company besides providing its operations within Australia and also

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has international presence across 20 countries. The company since its establishment is known to
providing innovative communication solutions to customers and improving their quality of life
and work with the help of better connection services. The major telecommunication product and
services provided by the company includes mobile phones, mobile devices and broadband
internet and entertainment products and services. The telecommunication and information
services provided by the company are utilized by businesses, governments, communities and
individuals within Australia and at international level (Annual report 2017: Telstra Corporation).
Section 1: Cash flow Statement
Section 1.1: Important items listed in cash flow statement of Telstra Corporation and
understanding of each item of cash flow statement
Below table shows the important items that are listed in the cash flow statement of the
Telstra Corporation.
Important financial items of Cash Flow Statement
Telstra Corporation
For last three years ( 2015, 2016 and 2017)
Amount in $ million
Particulars 2017 2016 2015
Items of operating activity
Cash Received from customers
$
31,288.00
$
31,163.00
$
29,521.00
Cash payments made to suppliers and employees
$
(21,997.00)
$
(21,179.00)
$
(19,621.00)
Government grants received
$
235.00
$
182.00
$
166.00
Net placement of deposits by Auto home Inc. that
are not part of cash equivalents
$
-
$
(173.00)
$
-
Income taxes paid
$
(1,751.00)
$
(1,860.00)
$
(1,755.00)