Corporate Accounting Report: ActiveX Limited CF and IS Analysis

This report offers a comprehensive analysis of ActiveX Limited's corporate accounting practices. It begins with an introduction and company background, followed by a detailed examination of the company's cash flow (CF) statement, including operating, investing, and financing activities, highlighting trends from 2015 to 2017. The report then delves into the company's income statement (IS), exploring other comprehensive income and the absence of such items due to limited revenue sources. A significant portion of the report is dedicated to accounting for corporate income tax, including tax expenses, deferred tax liabilities, and the distinction between income tax payable and income tax expense, emphasizing the company's losses and lack of taxable income. The report concludes with a summary of findings, emphasizing the company's focus on managing expenses and the increased cash inflows from financing and investing activities, while also noting the need for additional disclosures to fully understand the reasons for the losses. References are provided for further reading.

Corporate Accounting
5/21/2018

Contents
Introduction......................................................................................................................................3
Company Background.....................................................................................................................3
CF Statement Analysis....................................................................................................................4
Other Comprehensive IS..................................................................................................................6
Accounting for corporate income tax..............................................................................................6
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

Introduction
This report is being presented to review the accounting procedure of ActiveX Limited Company.
It represents the followed procedure to prepare the cash flow (CF) statement for the company.
This report also investigates the income statement (IS) of the company to understand the
included points in its other comprehensive income. While representing the accounting procedure
of the selected company, this report provides insightful description of each included item in the
CF statement of the company. It provides a clear description of the company’s income tax
expense as well as explains that why the income tax shown in the income tax statements of the
company in the last three years. This report provides a clear understanding of the deferred tax
assets and liabilities.
Company Background
ActiveX Limited is a mineral exploration company listed on Australian Security Exchange
(ASX) as AIV. The key functions of the organization include exploration of quality mineral
resources and their acquisition, identification and delineation. The key minerals for exploration
by company include gold, silver, potash and their byproducts. It is focused on the projects related
to exploration of gold. The company is implementing various new and advanced leaching
methods for extraction of mineral resources like potash and its byproducts. The company is
located in Brisbane, Australia (ActivEx Limited, 2018).
The company has established the higher standards of asset portfolio including 33 granted permits
of exploration of minerals, 1 granted mining lease, and license application of prospecting. The
company has adopted corporate governance for comprehensive systems of control. The company
also works in consultancy with traditions, culture, value and beliefs of the community. The

ActiveX limited is focused towards providing fair and equitable treatment to communities
(ActivEx Limited, 2018).
After the brief explanation about the company, this report represents the analysis reports based
on its CF statement, IS and tax expense based on the figures of last three years.
CF Statement Analysis
CF from operating activities
The CF from operating activities for the year 2015 include the activities like receipts from sale of
product, receipts from debtors, payments for exploration, development, production and
administration, received amount of dividends, interest received, interest paid, income tax and
other associated costs.
The CF from operating activities for the FY 2016 includes the activities like payments to
suppliers and employees and interest received. The CF from operating activities for FY 2017
includes payment to suppliers, salary of employees, interest received and proceeds from
insurance recoveries.
There net operating CF from operating activities for the year 2015 is $415,000, for the year 2016
is $462,100 and FY 2017 is $669,403. The number of items in the CF statement has been
changed from 2015 to 2017 as income tax and costs are included in other proceeds (ActivEx
Limited, 2015).
CF from investing activities
The CF from investing activities include the items like purchase of prospects, equity assets, fixed
assets, sale of fixed assets, equity, loans given, loan received, exploration expenditure and others.

The net CF (used in) from investing activities for FY 2015 is $ 579,076, FY 2016 is $ 495,797
and FY 2017 is 1.183,743. (Activex Limited, 2017)
CF from financing activities
The CF from financing activities include the items like proceeds from share and options
issuance, proceeds from forfeited shares sale, proceeds from borrowings, paid dividends and
others. The CF from financing activities for FY 2015 is $ 745,781, FY 2016 $ 51,076 and FY
2017 $1,286,961.
Conclusion for CF statement analysis:
The company is more focused to meet the expenses of the company. The cash outflow of the
company is high as compare to its revenue sources. Hence, the company is more strategic about
financing activities. The amount of cash inflows is higher for financing activities as compared to
investing and operating activities. There has been an increase in cash inflow from financing and
investing activities in year 2017 from FY 2015. The increase in cash inflows depicts the
increased profitability of the organization.
The other income in CF statement includes the recoveries from insurance. The fixed assets are
calculated at cost value. Depreciation is calculated on their cost. The company has received
decrease in operating expenses. The exploration and evaluation asset includes the expenses made
for the exploration and evaluation activities related to extraction of mineral resources. The
recoverability of the expense of exploration asset is dependent of the factor related to success of
exploration projects and sale of areas. Operating activities also include the depreciation
calculation and loss on impairment of fixed and exploration assets. The CF statements are used
to inform the investors about how the company has been financed and is using its investment
decisions (ActivEx Limited, 2016).

Other Comprehensive IS
An IS provides the description of the income and expense source of the business. On the other
hand, a business also includes some items that come in other comprehensive IS. In this case, the
company doesn’t include any other comprehensive income item in its financial statements in last
3 years because the company has limited income source and the company is more focused
towards the main income sources. Basically, other comprehensive income consists of those items
that have effects on balance sheet, but it doesn’t report on the IS of the company. These included
items do not affect the IS of the business, they will also not cause any change in the retained
earnings of the business. The best examples of other comprehensive IS are unrealized profit or
loss on hedge financial instruments and some employees’ benefit plans. On the other hand,
foreign currency translation related adjustments are also included in these other comprehensive
income (Accounting Coach, 2018).
After the understanding of the nature of other comprehensive IS, it becomes easy to analyze that
why the company is lacking to generate for the same. The company is not able to generate as
much revenue so that the company can cover its operational costs. The company is only focusing
on the common sources of its income and expenses. Hence, the company doesn’t show any item
that comes under the comprehensive income source.
Accounting for corporate income tax
A corporate income tax is also called a corporation tax as well as company tax. It is a direct tax
that imposed by the jurisdiction on the capital or income of the business (Australian Government
, 2018). To understand the accounting procedure of corporate income tax, it is required to review
the tax structure and financial statements of the company that whether the company comes in tax
slab of the nation. In this case, some important aspects related to its tax procedure are as follows:

Tax expense for ActiveX limited in its financial statements: Basically, the tax expense is
calculated by multiplying the tax rate with generated income by a business (Accounting tools,
2017). In case of ActiveX Limited, the company has been facing losses in its financial activities.
The revenue of the company is too less as compare to its various expenses. Like, the company
faced a loss of $1,157,203 in 2017, $ 943,049 in 2016, and $ 520,541 in December 2015. Hence,
the company is not in the condition to bear a burden of tax expense in its financial statements.
Due to the absence of taxable income, this study is limited to depict about the taxable amount in
last 3 financial years of the company.
Deferred tax liabilities: A deferred tax liability is also a tax expense which is being assessed but
has not been paid or due for current accounting period. It records the facts that company will, or
pays in the future in form of additional income tax because of the transactions that took place in
the current accounting period, for example installment sale receivable. However, the company is
facing loss in its financial records since a long time period, it has not been in condition to show
deferred tax liabilities in its financial statements.
The current tax liabilities are measured at the expected amount that need to be paid to relevant
taxation authority. Here, deferred income tax expenses reflect movements in the deferred tax
liability balances during the accounting year as well as unused tax losses. The deferred income
tax expense is charged outside the profit or loss when tax amount relates to the items that are
being recognized outside the profit or loss. Here, as per the loss conditions of the business in last
few years, the company has not recorded any income tax payable or current tax assets. It showed
net unbooked deferred tax asset for $3,368,000 in 2017 and $ 3,327,000 in 2016 (Activex
Limited, 2017).

Income tax payable different from income tax expense
Depending on the standard business accounting rules, income tax expense is what the firm has
computed and owes to pay as tax. On other hand, income tax payable is the amount that the firm
owes in tax depending on the tax code rule. Income tax payable is that amount that is visible
under the liability section in the firm’s balance sheet till the time firm pays the tax amount
(Accounting tools, 2017). In this case, the company faced loss in its financial practices due to the
heavy burden of business expenses and low generated revenue. Hence, the income tax expense
and income tax payable, both are not included in its financial reports.
Income tax expense shown in the IS
The income tax expenses of the company comprise its deferred tax expense and current income
tax expense. The current income tax expenses of the firm are charged to the profit and loss as the
tax payable on company’s taxable income. The company does not show any income tax expense
in IS in last 3 years. However, there is not any figure such as income tax paid has been
mentioned in the CF statement of the company.
Learning and new insight from financial statements
To get a fine measure of taxable income or tax liabilities of the company from its financial
statements, some additional disclosure will be likely necessary. Although, ActiveX limited is not
in the condition to pay income tax due to its excess expenses over its revenue sources, there must
be some additional disclosure required to understand the reasons of losses and not generating
taxable income. Due to the lack of taxable income, this study doesn’t provide a deep analytical
view about the tax procedure in firm’s financial statements that create confusing fact about the
treatment of tax.

Conclusion
CF analysis has been used in this report as CF analysis helps in measuring how much cash is
generated and spent by the business during the given time period. Cash is something which is
tangible quantifiable and it can be easily measured in the standard units which are acceptable to
anyone. While comparing the two companies, no matter how different is CF is a kind of vehicle
for the preparation of the true asset to asset comparison. There are many types of unscrupulous
techniques which can be utilized for inflating the profits, to artificially enhance the value of the
assets or to otherwise make the business picture look more successful than it really occurs. It is
quite difficult in fact to do the same with the cash figures.
The analysis reveals that the company is trying hard to meet out the daily expenses of the
company. The outflow level of the cash seems to be a bit high in comparison to the revenue
sources. The comparison in between the operating activities, financing activities and investing
activities reveals that the CFs in case of financing activities are high in comparison to the
investing and operating activities. The comparative analysis shows that the amount of cash
inflow in financing and investing activities has been high in 2017 from the year 2015. The
increment in the flow of cash reveals that the level of productivity has enhanced in the company.
Operating expenses of the company have decreased in this time period because of high
production costing
The information in this presented report states about the accounting procedure of the company
that what is being included in its CF statements and what is not being included in its IS, and how
the company is being managing its tax accounting procedure. This report depicts about the
policies that has been followed by preparing the annual reports of the company in last 3 years.
Hence, it can be concluded that this report represent an analytical view for the company’s

accounting and tax procedure but as per the lack of financial performance, this study seems
limited to describe the treatment of tax as well as other comprehensive income items.
In last, it can be stated that this report helps to review the financial statements of the company
and provide an understanding about aspects of business in CF statement, IS and tax treatment.
References
Accounting Coach, 2018. What is other comprehensive income? [Online] Available at:
https://www.accountingcoach.com/blog/what-is-other-comprehensive-income [Accessed 21 May
2018].
Accounting tools, 2017. Income tax expenses. [Online] Available at:
https://www.accountingtools.com/articles/2017/5/12/income-tax-expense [Accessed 21 May
2018].
ActivEx Limited, 2015. Mining explorationentity quarterly report. [Online] Available at:
http://activex.com.au/wp-content/uploads/2018/03/Quarterly-Cashflow-Report-September-
2014.pdf [Accessed 21 May 2018].
ActivEx Limited, 2016. Financial Report. Activex Limited.
Activex Limited, 2017. 2017 Annual Report. Activex limited.
Activex Limited, 2017. Annual Report 2017. Activex Ltd.
ActivEx Limited, 2018. About us. [Online] Available at: http://activex.com.au/ [Accessed 20
May 2018].
ActivEx Limited, 2018. Actvex Limited. [Online] Available at: http://activex.com.au/ [Accessed
20 May 2018].
Australian Government , 2018. Company tax rates. [Online] Available at:
https://www.ato.gov.au/Rates/Company-tax/ [Accessed 2018].