HI5020: Corporate Accounting Analysis of AGL and Beach Energy Limited

This report provides a comprehensive analysis of the corporate accounting practices of AGL Energy Limited and Beach Energy Limited, both listed on the Australian Securities Exchange (ASX). The analysis begins with an executive summary and an introduction that highlights the importance of accurate financial reporting for strategic decision-making. The report then delves into the owners' equity sections of the balance sheets for both companies, detailing contributed equity, reserves, retained earnings, and issued capital. A comparative analysis of the debt and equity financing strategies of both companies over a three-year period is also included. The cash flow statements of AGL Energy and Beach Energy are examined, focusing on operating, investing, and financing activities, with comparisons made across the three years. The report further explores the other comprehensive income statements, differentiating between items that may or may not be reclassified to profit or loss, and assesses the impact of these items on the overall financial performance of the companies. Finally, the report provides insights into the tax expenses reported in the latest financial statements of both companies, providing a well-rounded overview of their corporate accounting practices.

Corporate Accounting 1
Running Head: Corporate Accounting
Corporate Accounting

Corporate Accounting 2
Executive Summary
The report explains about the various corporate accounting aspects which are been taken into
consideration by the individuals in context of AGL Energy Limited and Beach Energy Limited.
The various elements which are involved in the cash flow are also explained in the report as it
will help in generating the cash for organization. With this the comparison of equity with that of
the debt is also identified in the report by comparing the information of the last 3 years. The
aspects of the other comprehensive income statement are also depicted and with the
understanding of the corporate taxes are also provided throughout the report by calculating the
effective tax rates.

Corporate Accounting 3
Table of Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Owners Equity.................................................................................................................................5
Cash Flows Statement......................................................................................................................6
Other Comprehensive Income Statement........................................................................................9
Conclusion.....................................................................................................................................18
References......................................................................................................................................19

Corporate Accounting 4
Introduction
It is necessary in all the business that the financial information should be presented in the proper
and appropriate manner so that the accuracy can be maintained within the organization. This
information is necessary as it helps the managers of organization in taking the strategic decisions
for the organization. With this the report will also the comparative analysis of the various
elements which are present in the cash flow statement.The analysis of the comprehensive income
statement is also done as it will enable in understanding the variations between thelast years data
and the current financial year. The cash tax rates are also evaluated with the effective tax rates so
that the actual taxable income of the organization can be determined. These all the adjustments
are done in accordance with that of the Beach energy and AGL energy Limited which deals in
the same industry.

Corporate Accounting 5
Owners Equity
I).There are various items which are listed in the Beach Energy and AGL energy Limited
owner’s equity section of the balance sheet.
Contributed Equity:
It is determined as the amount of cash and is also the one of element of the total equity which is
recorded by the organization in their financial accounts (AGL Energy Limited, 2017). It is also
termed as the paid up capital which in other words can be determined as the amount of the total
assets and the cash that is given by the shareholders to the organization or the firms in exchange
of stock (Beach Energy Limited, 2017).
Reserves:
It can be defined as the amount which shows the credit balance and is also determined as the
shareholder’s equity. It is also the part of retained earnings which is kept by the organizations for
specific purpose so that it can be used by the organization in future (AGL Energy Limited,
2017).
Retained earnings:
This is the profit which is generated by the firms as well as the organizations and is also
distributed to the shareholders as dividends. This can also be said that if some of the amount is
left after paying the shareholders that amount is been used for the reinvestment so that it can be
taken into consideration for future operations of business.
Issued Capital:
This is the part of capital that is authorized by the organization. It also depicts the number of the
equity shares that can be earned or gained by the organizations (Beach Energy Limited, 2017).

Corporate Accounting 6
Yes, there has been the change which has been noticed that in AGL limited the retained earnings
amount have shown the increment which can be said that this amount may be invested by the
organization for their future operations. In case of Beach Energy Limitedthere has been increase
from the year 2016 to 2017 that the earlier the amount was $1548 which has been increased to
$1558 (AGL Energy Limited, 2017).
II).The investigation of the obligation and value has been finished by making the correlation
between both the associations. In Beach Energy Limited it has been seen that the measure of
obligation has been diminished from 2016 to 2017 that is it was $149 and which diminished to
$126 which is great sign for the association (Beach Energy Limited, 2018). The measure of the
value has been expanded that is in 2016 it was $1074 which expanded to $1402. Along these
lines, it very well may be said that the association is utilizing the value source to fund its tasks
(Beach Energy Limited, 2018).
In AGL Energy constrained the obligation has demonstrated the immense increment which can
be uncovered that the sum in 2016 was $6678 which has expanded to $6884 and the value sum
has been diminished from $7926 to $7574. Subsequently, the financing of the association has
been finished by raising the obligation (AGL Energy Limited, 2017).
Cash Flows Statement
III). In the cash flow statement of any organization, there are a few things which are
incorporated which have been conveyed in real money. They will be required to be
comprehended in an appropriate way with the goal that legitimate detailing is made. The points
of interest of them are given beneath:
 The focused transactions which are given in the operating activities segment are those
which help in compelling completing of the tasks, for example, the receipt which is

Corporate Accounting 7
produced using the clients and the installments that are made to providers. With that, the
money related pay and cost are likewise included (AGL Energy Limited, 2017). There
they are changing in past years as installment expanded from 10397 to 12216 in AGL and
for the shoreline; this is declining from 411.4 to 378. Additionally, the ascent is made in
receipts which are from 11903 to 13552 for AGL Energy and in the shoreline from 642.2
to 676.6 (AGL Energy Limited, 2017).
 The buy has been made for the advantages and property and furthermore different
speculations are made. The installment for resources and plants is declining in the
previous year from 533 of every 2016 to 498 of every 2017(AGL Energy Limited, 2017).
Offer of property is likewise produced using which money of 278 is gained.
 The buyback is made in AGL and sums to $473 million and furthermore the
reimbursement of the borrowings is made. If there should arise an occurrence of shoreline
vitality, there was reimbursement of convertible notes made in 2016 adding up to $165.2
however that isn't made in a present year (Beach Energy Limited, 2017).
IV). It has been observed that in the cash flow statement of both the organizations there are
various items which has seen the change and these changes needs to be taken into consideration
in the important ways as this will enable in achieving growth. The comparison of three years has
been done to evaluate the change.
AGL Energy Limited:
Particulars 2015 2016 2017 Change
2015-2016
change
2016-
2017
Change
2015-2017

Corporate Accounting 8
Cash flow from operating
activity
1044 1186 891 142 -295 -153
Cash flow from investing
activity
2175 81 302 -2094 221 -1873
Cash flow from financing
activity
924 1274 687 350 -587 -237
Beach Energy Limited:
Particulars 2015 2016 2017 Change
2015-2016
change
2016-2017
Change
2015-2017
Cash flow from operating
activity
228.5 233.
4
321.2 4.9 87.8 92.7
Cash flow from investing
activity
442.3 36.4 154.2 -405.9 117.8 -288.1
Cash flow from financing
activity
28.7 168.
7
18.3 140 -150.4 -10.4

Corporate Accounting 9
V). From the correlation which has been influenced it to can be noticed that AGL Energy
Limited is making more exchange in real money. The sums which are associated with this are
higher than that of shoreline vitality which demonstrates that it is working at a larger amount. In
the event of working increment there is a consistent ascent in shoreline restricted yet in AGL this
brought up in 2016 and after that there was a decrease in 2017 (AGL Energy Limited, 2017). The
speculation has additionally declined in AGL at a quick pace and shoreline vitality is likewise
confronting the same. The last position of trade is certain out shoreline vitality yet in AGL
Energy Limited there is a negative income balance.
Other Comprehensive Income Statement
VI). Theother comprehensive income statement is the one in which those earnings and costs are
incorporated which are not considered in the pay explanations. In this, the different things are
included which have not be acknowledged in the current money related year thus the
incorporation of them will be made in the period in which they will be figured it out. Some of
them are such which not be moved in wage explanation whenever and incorporates gain or
misfortune on the characterized benefits designs and wage impose which is there in connection
to such benefit or misfortune (AGL Energy Limited, 2017). Alternate exchanges which will be
moved in the consequent period incorporate the sum in regard of the income fences which are
occurring and offer of such wage from joint endeavor together with the expense which is to be
met for them. If there should arise an occurrence of Beach vitality, the occasions incorporate the
adjustment in the reasonable estimation of the benefits which are held available to be purchased,
procuring on the interpretation of every single outside task and the duty impact on them (Beach
Energy Limited, 2017).

Corporate Accounting 10
VII). The main motive of the income statement is to articulate the genuine position of the salary
of the business thus it in this just the practical sums which have been acknowledged is included.
By this, the genuine picture is appeared and those sums which won't be acknowledged in the
present time frame are incorporated into this with the goal that they can be conveyed to the
notice of all (Atanasov& Black, 2016). By this, they will be informed and will be exchanged to
the fundamental record once acknowledgment will be made.
VIII). Comprehensive Income Statement Comparison
AGL energy Limited:
Particulars 2016 2017 change 2016-
2017
Items that will not be reclassified subsequently to profit or loss
Remeasurement gain/(loss) on defined benefit plans -111 107 218
Income tax relating to items that will not be reclassified
subsequently
33 -32 -65
Items that may be reclassified subsequently to profit or loss
The gain in fair value of cash flow hedges 12 72 60
Reclassification adjustments transferred to profit or loss 29 -15 -44
The share of other comprehensive income of a joint venture -1 0 1

Corporate Accounting 11
Reclassification of joint venture losses transferred to profit
or loss on disposal of investment
15 0 -15
Income tax relating to items that may be reclassified
subsequently
-12 -17 -5
Other comprehensive income for the year, net of income tax -35 115 150
Beach energy Limited:
Particulars 2016 2017 change 2016-
2017
Items that may be reclassified to profit or loss
Net change in fair value of available-for-sale financial assets -9.3 13.8 23.1
Net gain/(loss) on the translation of foreign operations 2.1 -0.3 -2.4
Tax effect relating to components of other comprehensive
income
0.6 -2.3 -2.9
Other comprehensive income, net of tax -6.6 11.2 17.8
These items are not reported in the income statement as they will impact the overall income of
the organization. So, these items are reported separately in their respective other comprehensive
income statement account (AGL Energy Limited, 2017).

Corporate Accounting 12
IX). It is necessary in the organization to properly evaluate the financial performance of the
organization as well as the managers. The information related to the performance of the
managers is basically reported in the other comprehensive income statement of the organization
so this information will not be considered while evaluating the financial performance of
managers (AGL Energy Limited, 2017). The main reason behind this is they are not yet reconcile
and also they does not impact the profitability of organization until they are reconciled.
X). What are the tax expenses shown in the latest financial statements of the two companies
that you have selected.
The income tax is the amount which basically represents the statutory amount that is paid as the
tax or about to pay. In case of Beach energy limited the amount was $-79.8 million in the 2017
while that in AGL energy the tax expenses were $225(AGL Energy Limited, 2017). The income
tax benefit perceived by Beach Energy constrained is the consequence of acknowledgment of
conceded charge costs by the organization in the earlier years. The present assessment cost
identifying with budgetary year 2017 identifies with sum $6 million. The proper method of
advantage perceived by Beach Energy Limited is demonstrated as follows:
Particulars Amount ($) million
Current financial year tax expense 6.0
Over provision in the prior year (4.3)
Other 0.1
Recognition of capital losses (2.3)
Recognition of deferred taxes (79.3)