HI5020 Corporate Accounting: Equities, Liabilities, Cash Flow Analysis

This report provides a comprehensive financial statement analysis of three ASX-listed mining companies: Newcrest Mining Ltd, AngloGold Ashanti Ltd, and Northern Star Resources Ltd. The analysis focuses on key aspects of their financial performance, including changes in equity items (issued capital, accumulated losses, reserves, and non-controlling interest), liability items (trade payables, borrowings, provisions, and deferred tax liabilities), and cash flow activities (operating, investing, and financing). A comparative analysis of debt-equity positions highlights the solvency of each company, while an examination of cash flow statements reveals trends in investment and financing activities. The report also explores other comprehensive income (OCI) and corporate income tax, including effective tax rates, deferred tax assets/liabilities, and cash tax rates, providing insights into the companies' tax management strategies. This analysis offers a detailed overview of the financial health and accounting practices of these prominent mining companies.

Running head: CORPORATE ACCOUNTING
Corporate accounting
Name of the student
Name of the university
Student ID
Author note

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CORPORATE ACCOUNTING
Executive summary
The report will focus on the financial statement of various ASX listed companies with regard
to equities, liabilities, cash flows statement, other comprehensive income and corporate taxes.
Selected companied for this report will be Newcrest Mining Ltd, AngloGold Ashanti Ltd and
Northern Star Resources Ltd. The report will focus on the changes in amounts of various
items under equities, liabilities and cash flows. It will further, highlight the tax aspect
including various taxes like cash tax, book tax and deferred tax.

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Table of Contents
Introduction................................................................................................................................4
Equity and liabilities..................................................................................................................5
(i) Equity items.................................................................................................................5
(ii) Liability items..............................................................................................................7
(iii) Comparative analysis of debt and equity position.....................................................10
Cash flow statement.................................................................................................................11
(iv) Listed cash flow items...............................................................................................11
(v) Comparative analysis.................................................................................................12
(vi) Comparative analysis selected for explaining insights..............................................15
Other comprehensive income statement..................................................................................15
(vii) Reported items under other comprehensive income (OCI).......................................15
(viii) Why items of OCI are not reported in the profit and loss statement.....................16
(ix) Comparative analysis of items reported under OCI..................................................16
(x) Including comprehensive income for evaluating the manager’s performance..........17
Accounting for corporate income tax.......................................................................................17
(xi) Reported tax expenses for 2017................................................................................17
(xii) Effective rate of tax...................................................................................................17
(xiii) Deferred tax assets or deferred tax liabilities.........................................................18
(xiv) Increase or decrease in deferred tax assets or liabilities reported by the entities. .18

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(xv) Cash tax.....................................................................................................................19
(xvi) Rate of cash tax......................................................................................................19
(xvii) Difference of cash tax rate from the book tax rate................................................20
Conclusion................................................................................................................................20
Reference..................................................................................................................................21
Appendix..................................................................................................................................23

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Introduction
Newcrest Mining Ltd is among the largest gold mining entities. They deliver the
superior return safely to the shareholders through recognising, developing and operating the
copper and gold mines. Further, the company is committed to wards maintaining the safe
environment for the people through developing and maintaining the mines in sustainable way
in compliance with the environmental standards and creating the long term relationship with
the communities under which they operate their business. Vision of the entity is to be the
miner of choice for the people, stakeholders, suppliers, partners and host communities
(Newcrest Mining Limited 2019).
AngloGold Ashanti Ltd from South Africa is globally diversified entity with world
class portfolio of the projects and operations. It has 3 projects and 14 mines in 10 countries.
Mission of the company is to create value for the employees, shareholders, social and
business partners through responsibly and safely mining, exploring, marketing and mining of
the products. Though the primary focus of the company is goal, it pursues the value creating
opportunities for other minerals where the company can leverage the existing assets,
experience and skills for improving the value delivery (AngloGold Ashanti 2019).
Northern Star Resources Limited is the global-scale and high grade underground for
gold mines and the company is firmly focussed for maximising the returns for the
shareholders. It continues investing for creating the strong asset base through the aggressive
exploration and strategic acquisition for extending the lives of mine through the world class
operations (Nsrltd.com 2019).

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Equity and liabilities
(i) Equity items
Newcrest Mining Ltd – listed equity items for the company are mentioned below –
 Issued capital – issued capital is the share capital issued to shareholders. Share capital
is the part of authorised capital that can be issued as per the articles of the entity.
 Accumulated losses – accumulated losses is the negative balance in the retained
earnings. The accumulated loss is generated when cumulative losses have been
experienced by the entity and payment of dividend exceeds cumulative profits
amounts (Reid and Myddelton 2017).
 Reserves – reserves are the profit portion that is earned through normal operation of
the company that is set aside for future purposes. Revenue reserves are segregated
into specific reserves and general reserves.
 Non-controlling interest – it is the equity portion in the subsidiary that is not
attributable t parent entity that has controlling interest that is more than 50% but less
than 100% and is consolidated into the financial result of the subsidiary with own
(Sarfaty 2015).
Changes in equity are as follows –
Reserves amount of the company has been changed due to changes in the amount of
Foreign Currency Translation Reserve.

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AngloGold Ashanti Ltd – listed equity items for the company are mentioned below –
 Share capital and premium – fund accumulated through issuance of the share in
exchange for cash or for any other thing is regarded as share capital. If the entity
decides issuing the share at the price that is higher as compared to the nominal value
or the face value the share is issued at the premium. This is quite normal practice for
the entities with strong financial position (Melloni, Lai and Stacchezzini 2018).
 Accumulated losses – discussed in Newcrest Mining Ltd
 Non – controlling interest – discussed in Newcrest Mining Ltd
Changes in equity are as follows –
Amount for share capital has been changed due to issuance of ordinary share.
Northern Star Resources Ltd - listed equity items for the company are mentioned below –
 Share capital – discussed in AngloGold Ashanti Ltd
 Reserves – discussed in Newcrest Mining Ltd
 Retained earnings – it is the part of business profits that is arrived through income
statement where the net profit is also used under balance sheet as well as cash flow
statement. It is not distributed for dividend and is reserved for the purpose of re-
investment (Sethi 2016).
 Changes in equity are as follows –

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Retained earnings amount has been increased due to increase in the amount of net
profit.
(ii) Liability items
Newcrest Mining Ltd – listed liability items for the company are mentioned below –
 Trade and other payable – it is the amount of bill raised to the entity by the suppliers
for the delivered goods or provided services in ordinary course of the business.
 Borrowing – it is the arrangement of fund through banks, financial institutions.
Generally the borrowings are repaid with the interest and repayment is made based on
the term of payments (Watson 2015).
 Provisions – it is the amount that is kept side to meet the projected liability that is
uncertain. Amount kept aside as provision are kept for using to fulfil the future
obligations.
 Current tax liability – current tax obligation is most straightforward as it represents
the tax obligation of the business associated with to current period’ taxable earnings.
 Deferred tax liabilities – DTL is the tax assessed or that is due for current period but
payment for which has not been made. It is generated through timing difference in the
paid tax and accrued tax (Laux 2013).
Changes in liability are as follows –

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Amount of non-current borrowings have been changed due to payment of old
borrowings. Deferred tax liability has been changed due to charges to income for temporary
differences on fixed assets.
AngloGold Ashanti Ltd – listed liability items for the company are mentioned below –
 Borrowing – discussed in Newcrest Mining Ltd
 Environmental rehabilitation and other provisions – it includes the provisions for
decommissioning, provisions for restoration.
 Provision for pension and post-retirement benefits – it includes the defined benefit
plans that is made for pension, medical schemes, provident fund that covers almost all
the employees
 Trade and other payables and deferred taxes – discussed in Newcrest Mining Ltd
 Deferred taxation – discussed in Newcrest Mining Ltd
Changes in liability are as follows –

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Amount of current borrowings have been changed due to payment of old borrowings
and raising new borrowings. Deferred tax amount has been changed due to charges to income
for temporary differences on fixed assets.
Northern Star Resources Ltd – listed liability items for the company are mentioned below –
 Trade and other payables – discussed in Newcrest Mining Ltd
 Borrowings – discussed in Newcrest Mining Ltd
 Current tax liabilities – discussed in Newcrest Mining Ltd
 Provisions – discussed in Newcrest Mining Ltd
 Deferred tax liabilities – discussed in Newcrest Mining Ltd
Changes in liability are as follows –

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Amount of trade payables have been changed due to payment of old payables and
generation of new payables. Amount of current borrowings have been changed due to
payment of old borrowings and raising new borrowings. Deferred tax amount has been
changed due to charges to income for temporary differences on fixed assets.
(iii) Comparative analysis of debt and equity position
Debt –equity amount –
Debt-equity percentage –
Debt equity comparison is carried out to analyse the company’s solvency position. If
the company has high debt component it represents that the company’s solvency position is in
threat as high debt portion will increase its leverage. On the other hand, higher level of equity

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represents the stable position of the company as lower percentage of debt will not threaten the
company towards insolvency. From the above it is recognised that the Newcrest Mining Ltd
and Northern Star Resources Ltd has low proportion of debt that is 33% to 35%. On the other
hand, debt component of AngloGold Ashanti Ltd is 62.54% that is significantly high as
compared to other 2 entities. Hence, the leverage position of AngloGold Ashanti Ltd is high.
Cash flow statement
(iv) Listed cash flow items
Cash flow statement of selected entities represent the aggregate data regarding the
cash inflows of the entity received from the operating activities, investing activities and
financing activities. Details of each item are as follows –
 Cash from operating activities – this section represents the cash generating ability of
the entity from the core activities. It includes the net income, adjustments for non-
cash expenses and changes in the working capital.
 Cash from investing activities – this section represents the aggregate changes in the
cash flow position of the company resulted from the investment gain and losses and
changes resulted from amount spent for capital asset like plant and property (Pavlović
and Bogdanović 2013).
 Cash from financing activities – this section accounts for the external activities that
allows the entity to raise capital. Apart from that, the financing activities include
repayment made to investors, changing or adding up, loans and issuing stocks.
Changes for the items of cash flows statement –
 Newcrest Mining Ltd – cash used for investing activities has been increased from $
427 million to $ 728 million. The increased amount was contributed towards payment