Analysis of GDI Property Group's Corporate Accounting Practices

The essay provides an analysis of the GDI Property Group's annual report with a focus on corporate accounting elements such as equity, reserves, and taxation. It highlights the group's composition of equity involving ordinary units and various reserves including share premium and statutory fund reserves. Furthermore, the discussion elaborates on deferred tax assets in light of tax consolidation practices employed by the company and its subsidiaries. A unique aspect of GDI Property Group is its approach to taxation where it benefits from capital gains distributed to unit holders without direct tax liabilities under current legislation. The group's strategy for managing potential tax obligations through intra-group funding arrangements and the impact of separate taxpayer accounting are also explored.

Running head: CORPORATE ACCOUNTING
Corporate accounting
Name of the university
Name of the student
Authors note

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Table of Contents
Requirement i).................................................................................................................................1
Requirement ii)................................................................................................................................1
Requirement iii)...............................................................................................................................1
Requirement iv)...............................................................................................................................1
Requirement v)................................................................................................................................2
Requirement vi)...............................................................................................................................2
Requirement vii)..............................................................................................................................2

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Requirement i)
Analysis of annual report of GDI property group stabled depicts that equity comprise of
some of items such as contributed equity, retained profits and reserves. Equity of the group is
divided into equity attributable to equity holders of the company, equity attributable to trust unit
holders and equity attributable to external non controlling interests. The value of contributed
equity attributed to equity holders as depicted from the balance sheet stood at$ 22264000, value
of reserve stood at $ 125000 and value of retained profits stood at $ 3332000 for the financial
year 2017.
Contributed equity is one of the items in the section of shareholders equity in the
statement of financial position. It represents the total stock value that is purchased by
shareholders directly from company that is issuing shares. Contributed equity is the paid in
capital that is given by shareholders in terms of amount of cash or assets in exchange for stock
(Camfferman and Zeff 2015).
Reserves are one of the parts of business profits that have been kept aside for
strengthening the financial position of entities. It is the liabilities that are attributable to business
and are used for repaying debts, purchasing fixed assets, dividend repayments, bonuses and

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expansion of funds. Capital reserves and revenue reserves are the two types of reserves that are
used by business. Revenue reverses are that portion of profits that is generated by the operations
of company and capital reserve on the other hand is generated from profits that arise from
sources that are other than trading activities (Arnold et al. 2015).
Retained profits are than profits that are reinvested by organization into business and they
are not paid or distributed to shareholders by way of dividend (Roy 2015). It is regarded as one
of the significant long-term sources of finance for running the business.
Total amount of tax expenses and benefit attributable to GDI property group stapled is
recorded in the consolidated statement of profit and loss and other comprehensive income. Group
recorded income tax benefit of amount $ 345000 in financial year 2017 and income tax expense
of $ 248000 in financial year 2016 respectively.

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Requirement iii)
The accounting income of group for the financial year 2017 and 2016 stood at $ 106970
million and $ 47949 million. Effective tax rate that is employed the group stood at 27.5%.
Therefore, the value of accounting income time’s taxation rate for both the years stood at
(27.5%. * $ 106970= $ 29416.75) and (27.5%. * $ 47949= $ 13185.97). On other hand, income
tax benefit and expenses stood at $ 345000 and ($ 248000) for year 2017 and 2016 respectively.
It can be seen from the computation of figures that there is considerable difference between the
amount of tax expenses recorded and the accounting income of company times the taxation rate.
This difference is amount is attributable to the fact that the accounting treatment for computing
income tax is different from the accounting treatment used for computing accounting income of
the group.
Requirement iv)
The amount of deferred tax assets have been recorded in the section of noncurrent assets
of the consolidated statement of financial position. Deferred tax amount for the financial year
2017 and 2016 stood at $ 1258 million and $ 913 million respectively. Recording of deferred tax
assets is done because of recognition of unused tax losses and temporary differences and this is
done to the extent that probable future taxable profits is available against which the utilization of
deferred tax assets is done (Agrawal and Cooper 2017).
Requirement v)
GDI property group stapled has not recorded any income tax payable in both the
financial year that is 2017 and 2016 respectively.

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Requirement vi)
GDI property group has not recorded any amount of any income tax paid in financial year
2017 because organization has received income tax benefits rather than incurring income tax
expenses. Therefore, the difference between income tax expense and income tax payable cannot
be ascertained.
Requirement vii)
From the analysis and evaluation of annual report of GDI property group stabled, it has
been ascertained that the group has not paid any income tax in the current year, rather they have
benefitted from taxation. Treatment of tax under in the financial statement of organization has
been found to be interesting and surprising as the trust is not liable to pay tax under the current
income tax legislation. Capital gains that are realized through taxation is distributed to the unit
holders. This particular financial report of organization does not take into account liabilities that
are arising from capital gains tax that arises from selling of properties. Total amount of income
tax benefits or expense consists of deferred tax expense or income and current income expense
or benefit (Schaltegger et al. 2017). There is not recognition of deferred income tax for the assets
and liabilities that are recognized from the initial recognition except for business combination.
Tax consolidated groups have been formed by the company and its wholly owned
subsidiaries and therefore they are taxed as single entity with effective from 16th December,
2016. Organization has employed an approach of separate tax payer within the group that helps
in recognition of deferred tax liabilities, deferred tax assets and current income tax income and
expenses in the separate financial statements. This recognition using the mentioned approach is
done by making reference to carrying amount of liabilities and assets and considering the
applicable tax values under tax consolidation (Reeve et al. 2014). Moreover, the extent and

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amount of deferred tax assets that are arising from tax losses that are unused in the tax
consolidated group is determined by the probability that there will be availability of future
taxable against which the utilization of assets are done. The obligations of funding of tax
consolidated group members in regard to taxation amount is done by the Group by entered into
an arrangement concerning funding of taxation in association with other members of tax
consolidated group. Allocation of liabilities concerning income taxation is determined by the
agreement of tax sharing and it is done when company has done any default in meeting taxation
obligations (Di Pietr et al. 2015). With regard to the agreement concerning taxation, there has not
been any recognition of amounts in the financial statements and the reason is attributable to the
fact that any sort of payment of amounts under tax agreement consideration is regarded as
remote by the group.

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