HI5020 Corporate Accounting: Analyzing CBA and NAB Financials

This report provides a comparative analysis of the financial statements of Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB), focusing on consistency in annual reports and compliance with accounting standards. It examines key elements such as owner’s equity, cash flow statements, deferred tax accounting, and other comprehensive income, detailing their impact on the companies' financial positions. The analysis covers ordinary share capital, reserves, retained earnings, operating activities, investing activities, and financing activities. Ultimately, the report concludes that both banks adhere to similar accounting rules and regulations, ensuring relevant information is provided to stakeholders. Desklib offers a platform for students to explore similar documents and solved assignments for further study.

RUNNING HEAD: CORPORATE ACCOUNTING
Corporate accounting

Corporate accounting 2
Executive Summary
The report is prepared on Commonwealth Bank of Australia and National Bank of Australia with
a purpose to determine the consistency in the contents of its annual reports. The report
summarizes the presentation, disclosure, compliance with accounting standards and other factors
in order to ensure that proper accounting rules have been followed by the banks. It discusses the
items of Owner’s equity, cash flow statement, accounting for deferred tax and other
comprehensive income statement. The items are explained in detail and the impact of the same
on company’s financial position is analyzed. The report concludes that the financial reports of
both the banks are prepared by keeping in mind the same rules and regulations in order to
provide relevant information to the stakeholders.

Corporate accounting 3
Contents
Introduction.................................................................................................................................................4
Description of the companies......................................................................................................................4
Owners’ Equity...........................................................................................................................................5
Part 1.......................................................................................................................................................5
Part 2.......................................................................................................................................................7
Cash Flow Statement...................................................................................................................................7
Part 3.......................................................................................................................................................7
Part 4.....................................................................................................................................................10
Part 5.....................................................................................................................................................15
Other Comprehensive Income Statement..................................................................................................16
Part 6.....................................................................................................................................................17
Part 7.....................................................................................................................................................18
Part 8.....................................................................................................................................................18
Part 9.....................................................................................................................................................18
Accounting for corporate income tax........................................................................................................19
Part 10...................................................................................................................................................20
Part 11...................................................................................................................................................21
Part 12...................................................................................................................................................21
Part 13...................................................................................................................................................21
Part 14...................................................................................................................................................21
Part 15...................................................................................................................................................21
Part 16...................................................................................................................................................21
Conclusion.................................................................................................................................................22
References.................................................................................................................................................23

Corporate accounting 4
Introduction
The report provide insights about the importance of complying with the accounting standards
and principles for the purpose of recording, recognizing and presenting the financial information
in the annual reports. It is very important for the companies to properly follow all the rules and
regulations so that reliable and relevant information can be communicated to the investors and
shareholders (Brigham and Ehrhardt, 2013).
The report analyse the financial statements of CBA and National Bank of Australia and discusses
the each line item of the statements prepared. It includes the evaluation of comprehensive
income statement, cash flow statement, balance sheet and reporting of tax expense. The
evaluation is done are compared to each other.
Description of the companies
Commonwealth Bank
CBA is an Australian banking group that is engaged in providing integrated financial services to
the countries like Australia, New Zealand and others. Its core activities include distribution of
financial services. It operates through retail banking services, Bankwest, New Zealand other
divisions. The services offered by the company include business loans, international payments,
insurance services and credit cards. It is listed on ASX and considered as the largest financial
institution in the country (Bloomberg. 2018).
National Bank of Australia

Corporate accounting 5
It is also a financial institution having its operations in Australia, United States and United
Kingdom. It operates through segments like Consumer Banking and Wealth, Corporate and
Institutional banking, Business and private banking and NZ Banking segments. It offers services
like term deposits, savings account, statutory trust and farm management accounts. NBA also
look for provide commercial and personal loans to its clients across the country (Bloomberg.
2018).
Owners’ Equity
Shareholder's Equity
Commonwealt
h bank
National
Australian
Bank
Share Capital
Ordinary Share
capital 34971 34627
Other Equity
Instruments
Reserves 1869 237
Retained profits 26330 16442
Part 1
 Ordinary share capital

Corporate accounting 6
Ordinary share capital is the capital which is given by the proprietors of the business in return of
shares. They are positioned after the inclination shares. The conventional offer capital of the
Commonwealth Bank of Australia is A$34971 and that of the National Australian Bank is
A$34627 which is lower when contrasted with the previous bank. The investor capital of both
the banks have been quickened when contrasted with the earlier year from the yearly reports,
potentially on the grounds that the organizations may have sold the offers which raised the
income and diminished the costs. The offer capital of Commonwealth bank expanded from
A$33845 to A$34971 and that of the National Bank of Australia is A$34285 to A$34627, which
is as yet a moderate raise.
 Other equity Investments
They are the record which fills in as a legitimate proof of the proprietorship right in a firm like
an offer declaration. They are issued to the investors of the organization and are utilized to
support the business.
 Reserves
They represent the amount kept aside by the firm with the purpose of meeting its liabilities that
may arise in future. CBA has reserved worth $1869 and NBA reported the same amounted to
$237. The reserves have been diminished in the event of Commonwealth Bank of Australia
because of the debt repayments.
 Retained earnings
It reflects the amount retained by the company in the business after paying all of its liabilities
and other payments. It is the profit left with the company for paying dividends to its

Corporate accounting 7
shareholders. It tends to be utilized by the organization to pay the obligations and in addition the
future profits. The upsurge in retained income implies the organizations are steady and
beneficial. The RE of NBA has shown an upsurge from $16736 to $16442 while on the other
side; CBA’s earnings reflected an increase from A$23435 to A$26330(Commonwealth Bank,
2018).
Part 2
 Comparative analysis
The relative examination of the investor’s value of both the organizations exhibits the money
related position of the organization. The above components decide how much the proprietors has
put resources into the business and how they are performing in contrast with the previous years
and the contenders as well. The share capital of Commonwealth bank expanded from A$33845
to A$34971 and that of the National Bank of Australia is A$34285 to A$34627, which is as yet a
moderate raise.
Cash Flow Statement
Part 3
 Operating activities
Operating activities are the operations of the business which are straightforwardly identified with
the supply of the merchandise and the administrations to the market. These exercises are
considered as the centre exercises of the organization and precedents of such exercises are
conveying, showcasing and offering of an item or an administration.
Funds from operations

Corporate accounting 8
They are the amount which is utilized by the land speculation trusts to define the cash flow from
their operations.The Funds from operations are ascertained by including back the depreciation
value and subtracting any profit on sale (Collins Hribar and Tian, 2014).
Changes in the Working Capital
Net Working Capital is characterized as the distinction between the current assets and current
liabilities. In this manner an adjustment in the measure of the working capital will be reflected.
Net Operating Cash Flow
Net Operating income alludes to the money sum created by the organization through the income
it acquires, barring costs which are in connection to the long term investment on capital things.
Investing Activities
They are those exercises which will give the future advantage to the organization. The income
from the contributing exercises is a thing which reports the adjustment in the total position of the
organization whether through interest in the advantages and offer of the benefits.
Capital Expenditures
The sum an organization spends with a specific end goal to achieve the settled resources, land,
structures and the gear. It is comprehended that the use on the capital things will give the
advantage to the organization over the long haul (Campbell, 2015).
Net Assets from Acquisitions

Corporate accounting 9
The net resources from acquisitions are fundamentally the sum which is landed subsequent to
including all the above resources and consumptions.
Sales of Fixed Assets and Businesses
It is an ordinary procedure which is attempted either to pick up leverage when the cost is correct
or can empowers the income and benefits or when the piece of the advantage or a whole resource
winds up pointless.
Buy/Sale of Investments
All the transactions related to investments are made from the brokers and purchase of the same is
done with an intention to secure the company. The correct market cost or the positive market
cost when arrives the organization sells the investment.
Financing Activities
This category of activities includes business transactions with creditors and investors. They
generally contribute to the expansion of business operation or enhancing its existing activities. It
is the third category which is reflected in cash flow statement after reporting operating and
investing activities.
Transactions like cash dividends paid, issue of shares and debt, change in long term debt,
payment of financial obligations all appear under the financing activities of the company.
Net Change in Cash
The net change in the money mirrors the expansion or diminishing in the money and the money
counterparts from the beginning stage to the end purpose of a year. The net change is computed

Corporate accounting 10
because of money from working, contributing and the financing exercises (Graham and Lin,
2018).
Free Cash Flow
The free income is estimated by how much measure of the money the organization can produce
in the wake of satisfying for every one of the costs and can be utilized for the extension, profits,
decrease of the obligations and for other purposes.
From the income beneath it very well may be broke down and seen that if there should arise an
occurrence of the Commonwealth bank the net money from working exercises has been
enhanced and come to 2.651 from 0.841 when contrasted with the earlier year fundamentally on
account of the expansion in the assets from tasks and that of the National Australian Bank have
been lessened to 569 from (2327), the organization is attempting to improve.
Part 4
Cash flow Statement Commonwealth
Bank
National Australian
Bank
Fiscal year is July-June. All values
AUD Millions.
2018 2017 2016 2018 2017 2016
Funds from Operations 1580
0
12389 1721
5
1264
8
16787 -
1381
8
Funds from Operations Growth 0.275
3
-
0.280
3
0.346
9
-
0.246
6
2.214
9
-
1.425
1

Corporate accounting 11
Changes in Working Capital -
1462
3
-
13102
-
2169
8
569 -2327 728
Net Operating Cash Flow 1177 -713 -4483 1321
7
14460 -
1309
0
Net Operating Cash Flow Growth 2.650
8
0.841 -
1.618
-
0.086
2.104
7
-
0.809
Net Operating Cash Flow / Interest
Income
0.034
1
0.021
4
0.131
4
0.481
8
0.523 0.461
4
Investing Activities
Capital Expenditures -980 -1097 -1768 -1028 -875 -976
Capital Expenditures (Fixed Assets) -477 -602 -1259 -1028 -875 -976
Capital Expenditures (Other Assets) -503 -495 -509 - - -
Net Assets from Acquisitions - -31 -857 - - -33

Corporate accounting 12
11782
Sale of Fixed Assets & Businesses 181 382 515 2269 52 382
Purchase/Sale of Investments -271 -25 - -1554 2635 -1203
Purchase of Investments -271 -25 - -
2339
6
-
22084
-
2517
4
Sale of investments 2184
2
24719 2397
1
Other Sources - - -
Net Investing Cash Flow -1070 -771 -2110 -313 -9970 -1830
Net Investing Cash Flow Growth 0.387
8
0.634
6
0.640
7
0.968
6
4.448
1
0.740
2
Net Investing Cash Flow / Interest
Income
-
0.031
-
0.023
1
-
0.061
9
-
0.011
4
-
0.360
6
-
0.064
5
Cash Dividends Paid - Total -5366 -6084 -5827 -4750 -4593 -3624
Common Dividends -5366 -6084 -5827 -4750 -4593 -3624