Corporate Accounting Report: Cash Flow and Income Analysis

This report provides a comprehensive analysis of Amcor Limited's corporate accounting practices, focusing on its cash flow statement, other comprehensive income, and income tax accounting. Part A delves into the significance of the cash flow statement, examining the company's cash activities categorized into operating, investing, and financing activities from 2015 to 2017, highlighting key changes and trends. Part B explores the other comprehensive income statement, explaining the components such as cash flow hedges, retained earnings, and foreign currency translation. Part C focuses on accounting for corporate income, including an analysis of Amcor's income tax payments, tax rates, and the impact of deferred tax assets and liabilities on the financial statements. The report utilizes financial data from Amcor's annual reports to illustrate the practical application of accounting principles and financial analysis.

Running head: CORPORATE ACCOUNTING
Name of the Student
Name of the university
Author note

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Table of Contents
Part A:...................................................................................................................................................2
Cash Flow Statement:........................................................................................................................2
List of items:......................................................................................................................................2
Changes:............................................................................................................................................3
Part B:....................................................................................................................................................4
Other Comprehensive Income Statement:.........................................................................................4
Part C:....................................................................................................................................................6
Accounting for Corporate Income:....................................................................................................6
References:............................................................................................................................................9

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Part A:
Discussion on Cash Flow Statements:
i) The importance of the statement which shows the financial performance of the
company by providing comprehensive information of all the cash activities of the
company cannot be undermined. It gives information about the most important element of
any business organisation, which is known as cash in hand at the end of the year. It is a
report card of the cash related activities of any company. Cash, being the most important
asset of any company is very necessary for any business entity’s sustenance. It is the
foundation on which the whole business is set up and on which it actually functions.
Therefore as a result of this very reason, its importance to the company or its group of
stakeholders cannot be ignored (Call, Chen and Tong., 2013). It helps the investors in
assessing the credit worthiness and the overall soundness of its financial planning’s and
structure. It is on the basis of this cash, that the investors decide, whether to invest in this
particular business or not. In this report, as a result of which, the cash flow statement of
the famous packaging company Amcor Limited which is listed in the Australian
Securities exchange has been provided and analysed (Pavlović and Bogdanović.,
2013.). The company of Amcor develops and produces packaging containers, specialty
cartoons and along with this focuses on the pharmaceutical, medical devices and personal
health care.
Catalogue of cash objects:
The cash flow of any company can be viewed with the help of a series of cash items such as
cash from investing, financing and operating activities, each one having a separate catalogue of
objects and items of their own. From the operating activities, cash dividend has been received by the
company from its vested interests in and around the world, interests has also been received in the
same way. Some interest expense has also been incurred and consequently been paid by the company

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(Günther, 2015). There are also some tax expenses which have been incurred and paid by the
company. In the arena of investing activities of the company, some purchase of plants, properties and
equipment’s has been made. In association with this, payments have also been made to all the
subsidiaries and joint ventures. The sale of the plants and machineries from the previous years has
also been done, which has brought in some fresh cash for the company. Amcor has also received
several amounts of cash as proceeds from the disposal of associates and controlled businesses (Hales
& Orpurt, S2013). There have also been some repayments of borrowings which were initially
borrowed by the company. In the financing activities arena, the packaging company has also seen
some activities.
Changes:
There has been a good amount of changes in each of the main three activities of the cash flow
statement for the year 2017 from the previous years. In the case of the operating activities, there has
been a decrease in the payment of dividends which the Amcor used to receive from its associates and
joint venture operations. It has come down from $20 million to $7 million in the year 2017. The
amount of interests received by the company has also decreased from $23 million in 2015 to a paltry
$11 million in the year 2017. The amount of taxes paid by the company has also increased from $155
in 2015, to 4170 in 2016 and it had a slight fall in the year 2017 to $160 million. The amount of
interest expense has also remained mostly consistent in the range of $180 million in the three year
period. In the case of the investing activities of the company, the purchase of plant and equipment’s
have been made and has consequently increased from $323 million to $348 million to $379 million in
the year 2017. The payment for subsidiaries and joint ventures have also increased considerably from
$98 million to $498 million in the year 2017. Sale of plants has also taken a downfall from $84
million to $30 million. In the case of the financing activities, the repayments of borrowings have
decreased from $5699 in 2015, to $5036 in 2016 to $3745 in the year 2017. Payment for treasury
shares have also taken a downfall from $78 million in the year 2015 to $40 in the year 2017. In the
same manner, proceeds from the borrowings taken earlier has also decreased considerably from $6084
to $3940 in the year 2017. Thus as it can be seen that a major amount of changes had been seen in the

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cash items of the year 2017 from the previous years, some have increased and on the other hand, some
have decreased.
ii) A fair and good amount of qualitative comparison analysis has been done with the
assistance provided by the diagram given below:
(Source: Amcor.com, 2018)
In the context of the comparative analysis of the three year performance of the packaging company,
some important observations have some out. In the arena of cash flow from operating activities, the
performance has been more or less remained the same with an average of $1500 throughout the three
year period. On the cash flow in the arena of the investing activities of the company, the performance
has been on an excessively fluctuating state, with the cash flow generating from $386 in the year 2015
to $1001 in the year 2016 till $632 in the year 2017. In the case of the financing activities, the
performance has been very rewarding as the average has remained consistently high throughout the
year. The amount of cash flow generating from the cash flow from financing activities has been very
high, when compared to the cash flow from other activities. Only it has decreased form the year 2015
where it had $6084 to $ 3960 in the year 2017.

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Part B:
Other Comprehensive Income Statement:
iii) There is some important informational items which have been a part and have remained a
part of the other comprehensive income statement of the year 2017.These are the
subsidiary items or the ancillary items of items which help the company in one ways or
the other and are a significant. The items are Cash flow hedges, amount of retained
earnings, share based payments and exchange differences on translating foreign
differences. These items form the most important part of the ancillary information units
of the company, which helps the main operations of the company.
iv) The explanation of each of these items mentioned in the other comprehensive income
statement are present below:
Cash flow hedges: The cash flow hedge is a different kind of a cash fund which has its own use and
significance. It is more often used for the purpose of reducing the impact of any kind of frequent
fluctuations in the amount of cash from changes in any of the financial assets or liabilities. There are
various reasons behind this phenomenon, and it primarily takes place because of the presence of
various kinds of risks, such as interest’s rate risks, or risks associated with floating debt instruments.
The various instruments associated with cash flow hedging are measured at their fair values which is
obtained from the prevalent market trends (Hoyle, Schaefer, and Doupnik, 2015).
Retained earnings: They are that part of the income and profits of the company which are not
distributed as dividends to the equity shareholders or the preference shareholders of the company.
They are kept in the cash coffers of the company in order to save them and use them for any future
users for in case of any contingency. The usage of this varies from buying any new properties for
expansion purposes or for the purpose of reinvesting the amount for better returns (Cimini, 2013).
These retained earnings are withheld for these purposes only and they find a place in the other income
statements of the company.

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Foreign translations and transactions: The parent company of any business entity has some
branches and holding companies in foreign locations and they conduct transactions with their foreign
markets on the behalf of their parent companies. In this way, the money which is derived from this is
generally in the foreign currency of that particular foreign country (Lombrano and Zanin , 2013). In
these regard, the transactions and the amount of foreign money is translated in the currency of the
native country of the parent company. For this purpose, this item is recorded in the other income
statement of the parent company.
v.) Cash flow hedge funds and the foreign translation reserves for foreign
items transactions and the retained earnings are not incorporated in the comprehensive
income statement of the company. Only the items which have been actually realised by the
company find a place in the comprehensive income statement of the company. Another
reason for this is the fact that the foreign exchange transactions do not form a part of the main
activities of the company which is the parent one. It is an ancillary part of the main frame, as
a result of which they have a place in the other income statement of the parent company
(Mechelli & Cimini, 2014). Another reason for this is the fact that there are some adjustments
which are to be made, with regards to the retained earnings of the company which cannot be
shown in the comprehensive income statement of the company.
Part C:
Accounting for Corporate Income:
vi.) Amcor is a very successful Australian packaging company and has always maintained their
lawfulness in terms of their regular tax payment practices. Whichever country they have established
their offices or have traded in, they have duly filed with all the income tax laws and regulations This
is what has made them a pioneer in the Australian as well as international market. As per the cash
flow statements of the company, the income tax paid for the year 2017 was $160, which was $170 in
the year 2016 3 (Amcor.com, 2018).

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Vii) On doing a comprehensive analysis of the income tax paid by the company, certain important
factors and revelations about the same have come out. The tax rate currently prevailing in the
Australian corporate sector is 30%. The income from the trading operations of packaging company
Amcor in the year 2017 was$ 614 million and for the year 2016 was$ 217 million. Thus a significant
amount of rise has been seen in this arena, this might be as a result of the expansion policies and the
increased operations in the Australian economy in the case of increased demand for housing and other
commercial interests of the government (Andrews, 2012).The calculated income tax for the year
2016 is (273*30%= $819) and for the year 2017 was (614$*30%= $1842). There exists a significant
amount of difference between the two because of the presence of various important factors such as
depreciation methods chosen, presence of deferred tax assets or liabilities etc.
viii) Deferred tax assets and liabilities are the most important aspects of any company’s financial
statement and on close analysis it could be seen that it holds true for Amcor too. As is evident from
the analysis of the financial statements of the company, it has been seen that the company has indeed
recorded the deferred tax assets and liabilities. The deferred tax assets of the packaging giant Amcor
for the year 2017 are $68 million and it was $48 million in 2016 (Amcor.com, 2018). Similarly, for
the year 2016, the deferred tax assets amounted to $216 million and it was $215 million.
The most prominent reason for the recording of the deferred assets and liabilities is the fact that the
companies most often overpay their tax liabilities or pay them in advance. This reverts back to the
company in the form of various incentives and tax reliefs. Similarly, in the case of the deferred tax
assets, some of them are received in advance for which accounts are to be maintained, as a result of
which, their recording becomes important.
ix) On the analysis of the annual report it was seen that that the company had not recorded any
kind of current tax assets. It is because of this, that the whole act of starting a comparison between the
income tax expenses of any kind and the current amount of tax assets could not be done. It also has
been observed that there has been a significant amount of difference which exists between the income
tax expenses and payments. The aggregate amount of income tax expense in the year 2017 was $9.4

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and it was $26 million for 2016. The income tax paid for the year 2017 was $160 and for the year
2017 was$ 170. The disparity exists because of many different factors such as method of depreciation
used, deferred tax assets and liabilities, amount of income tax actually paid etc. Each of these factors
exercise a fair degree of influence on the disparity.
x) It was also seen and observed that the total amount of income taxes which had been paid by
Amcor for the 2016 was $160 and it was $170 million during 2017. On the other hand, the income tax
expense as per the income statement of the company was 4151.7 for the year 2017 and for the year
2016 was $135.3 (Amcor.com, 2018).
The differences between the two amount takes place because of the adjustments which are to be made
because of the differences between the income tax which is shown and which is actually paid.
Moreover, the presence of the special items of the company such as the different kinds of depreciation
procedures adopted by the accountants of the company. The advance payments and the late payments
of certain expenses which have been incurred, cause such kind of rift in such cases. This causes a
wide range of differences in the two items.
xi) On careful analysis of the different aspects of the annual report of the packaging company,
Amcor, such as the cash flow statement, income statement, other comprehensive income statement
and the balance sheet of the company, many important factors have been found out. A specific
observation had been made about the applications of the relevant accounting standards and practices.
It has been seen that the company has mandatorily followed all the relevant provisions of all the
accounting associations like ASIC and AASB, while performing the recording of the financial
statements. Being a market leader in the sector of packaging and allied sectors, it has served an
exemplary behaviour by performing exceptionally well in the financial recording of statements.

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References:
Amcor.com. (2018). [online] Available at: https://www.amcor.com/ [Accessed 25 May 2018].
Andrews, W.D., 2012 A consumption-type or cash flow personal income tax. Harvard Law
Review, pp.1113-1188.
Bertoni, M., & De Rosa, B. (2013). Comprehensive income, fair value, and conservatism: A
conceptual framework for reporting financial performance.
Cimini, R. (2013). Reporting Comprehensive income issues: empirical evidence from France,
Germany and Italy. Economia Aziendale Online, 4(1), 1-17.
Farshadfar, S., & Monem, R. (2013). The usefulness of operating cash flow and accrual components
in improving the predictive ability of earnings: a re‐examination and extension. Accounting &
Finance, 53(4), 1061-1082.
Günther, R. (2015). Value-Relevance of Other Comprehensive Income under IFRS. University of St.
Gallen, St. Gallen.
Hales, J., & Orpurt, S. F. (2013). A review of academic research on the reporting of cash flows from
operations. Accounting Horizons, 27(3), 539-578.
Kuzmenko, V. V., Glotova, I. I., Tomilina, E. P., Kuzmenko, I. P., & Fedorenko, I. V. (2015).
Assessment Instruments of Economic Feasibility of Tax Transformations. Asian Social
Science, 11(19), 298.
Lombrano, A. and Zanin, L., 2013. IPSAS and local government consolidated financial statements—
proposal for a territorial consolidation method. Public Money & Management, 33(6), pp.429-
436
Mechelli, A., & Cimini, R. (2014). Is comprehensive income value relevant and does location matter?
A European study. Accounting in Europe, 11(1), 59-87.

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Pavlović, M. and Bogdanović, J., 2013. Cash flow statement. Školabiznisa, (3-4), pp.129-147.