Understanding Corporate Tax Expenses: A Case Study of CSR Ltd.

HI5020 – Corporate Accounting
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Table of Contents
Introduction:................................................................................................................................................3
Q.no.1..........................................................................................................................................................4
Q. no. 2........................................................................................................................................................5
Q. no. 3........................................................................................................................................................6
Q. no. 4........................................................................................................................................................7
Q. no. 5........................................................................................................................................................8
Q. no. 6........................................................................................................................................................9
Q. no. 7......................................................................................................................................................10
Conclusion.................................................................................................................................................11
References.................................................................................................................................................12
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Introduction
The project report highlights the interpretation and an in-depth study of final statements of CSR
Ltd. particularly the income tax expenses. The report aims to cover all the aspects relating to
corporate tax expenses, deferred tax asset or liabilities and similar items. All these aspects have
been covered taking the practical instance of a business enterprise CSR Ltd. this will facilitate
the better understanding of accounting treatment of aspects of income tax and its implications on
financial statements of any business enterprises. An attempt had been made to identify the
difference between the accounting income and income computed as per income tax provisions.
The report elaborates the valuable points require to understand such concepts.
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Q.no.1
In reference to CSR Limited Annual Report 2016, it can be analyzed that the equity of company
shown in balance sheet comprise of Issued capital, Reserves and Retained profits.
Issued Capital: According to Adejare (2015), share capital represents the number of funds that
shareholder invests in the company when the company establishes a shareholder’s generally put
in cash. As such, share capital is the first source of capital for every business (Adejare, 2015).
In the case of CSR Ltd., it can be seen that there is a reduction of share capital i.e., 1041.1
million in 2016 which was 1042.2 million in the previous financial year 2015. This happened
because the company is decreasing shareholders equity through the cancellations and share
repurchases, which is done for a number of reasons for increasing shareholder value and to
produce the efficient capital structure. So, after the reduction of issued share capital, the number
of shares CSR will decrease by the reduction amount.
Reserves: According to Astrauskaitė & Paškevičius (2016), reserves represent the value of
profits earned during a particular year apportioned for a particular purpose. CSR Ltd. has created
various statutory as well as non-statutory reserves namely, Hedge reserves, foreign currency
translation reserves, reserves for employees, trust reserve which is share based and general
reserve (Astrauskaitė & Paškevičius 2016).
Reserves are shown as 15.8 million in the present year which decreased in comparison to the
previous year of 17.1 million; 2015, because that happened as a result of a reduction in the actual
value of reserves through depreciation of reserves by CSR Ltd. and excess, issued the stock in
excess of par value.
Retained profits: According to Oloidi (2014), it is the total amount of net income that the
company decides to keep in, in every period a company may pay out of its dividends from its net
income. Any amount exceeding is added to retained earnings. Retained profits are increased in
this year to 127.0, which was 86.4 in the previous financial year 2015 which is good because it
means that the CSR is staying consistency profitable in the year 2016. As such, increase in the
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