Corporate Accounting: In-depth Analysis of Qantas Airways Financials

This report provides a comprehensive analysis of Qantas Airways' financial statements, focusing on corporate accounting principles. It examines the statement of cash flow, detailing items in operating, investing, and financing activities, and analyzes changes over the years 2015-2017, highlighting decreases in cash flow from operations and changes in investing and financing activities. The report also delves into the other comprehensive income statement, identifying key items like net exchange variances and fair value adjustments. It explains why these items are reported in the comprehensive income statement and discusses income tax expenditure, including reconciliation between tax expense and payable, as well as deferred tax assets and liabilities. The analysis concludes by comparing income tax expense with income tax paid, and providing insights into the charge for current tax on earnings based on adjusted profits, as well as the reconciliation of income tax expenditure to the amount of tax payable. The report references several academic papers to support the analysis.

Running head: CORPORATE ACCOUNTING
Corporate Accounting
University Name
Student Name
Authors’ Note

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Table of Contents
Requirement (i)..........................................................................................................................2
Requirement (ii).........................................................................................................................4
Requirement (iii)........................................................................................................................5
Requirement (iv)........................................................................................................................5
Requirement (v).........................................................................................................................5
Requirement (vi)........................................................................................................................6
Requirement (vii).......................................................................................................................7
Requirement (viii)......................................................................................................................7
Requirement (ix)........................................................................................................................7
Requirement (x).........................................................................................................................8
Requirement (xi)........................................................................................................................8
References................................................................................................................................10

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Cash Flow Statement
Requirement (i)
List of each item reported in the statement of flow of cash
The statement of flow of cash of the selected corporation Qantas Airways comprises of usual
three sections namely flow of cash from operating, investing as well as financing activities.
Essentially, this reflects the net cash and equivalents of cash. Particularly, items that are
mentioned under the operating activities include depreciation, adjustments in income,
alterations in the accounts receivables, changes in inventory as well as transformations in
liability. Essentially, it can be hereby mentioned that the flow of cash of each one of the item
has declined. In essence, this is owing to higher generation of earnings that is specifically
inflow of cash (Tschopp & Nastanski, 2014).
Thereafter, investing actions handle capital expends, investments as well as cash
expenditures. In essence, flows of cash from particularly investing actions include payments
for specifically property, plant as well as equipment (PPE) and intangible assets, interest
disbursements and at the same time capitalised on qualifying assets (Sierra‐García et al.,
2015). The investing actions include disbursements for acquisitions of particularly controlled
entities as well as net of cash attained and disbursements for particularly investments under
equity methods. Again, net receipts are acquired for aircraft that is assigned to investment
mentioned under equity method. Again, inflow of cash can be observed from proceeds
acquired from disposal of particularly plant, property as well as equipment (Siew, 2015).
Further, inflow of cash can also be acquired from disposal of controlled entities, net loan
repayment from specifically investments under equity method and refinancing of operating
lease of aircraft. However, cash derived from operations include cash receipts from customers
and cash payments to different suppliers as well as employees (Schaltegger & Burritt, 2017).

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Moreover, cash flows generated from financing activities include disbursements for
particularly capital return, share buy-back and treasury shares and receipts for proceeds from
particularly borrowing, proceeds from specifically sale, finance leaseback of different non-
current assets (Saeidi et al., 2015).
Discussion of changes in each of the items for the firm over the previous year
Essentially, net flow of cash from mainly operating actions has decreased to $2704 million in
2017 from $2819 million in 2016. This is mainly due to decrease in interest payment, further
increase in payments of cash and decrease in payment for cash for redundancies as well
associated costs. Again, the net cash that is used in investing activities include shows a
negative figure replicating cash outflow. The net cash outflow for investing actions has
increased from ($1923 million) to around ($2046 million). This is mainly due to increase in
interest paid as well as capitalised on different qualifying assets and specifically decrease in
proceeds from particularly disposal of particularly plant, property as well as equipment (Reid
& Myddelton, 2017). In case of financing activities, figure for net cash used is a negative
figure that is ($854 million), replicating a cash outflow. However, the cash outflow has
declined to ($854 million) from ($1825 million) due to decrease in payments for payments of
share buy backs and repayments for borrowings. However, at the end, the figure registered
for cash as well as cash equivalents stand at $1775 million in comparison to $1980 million.
This shows decrease in cash and cash equivalents at the ending of the year reflecting decrease
in cash inflow.

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Requirement (ii)
2017 in
$m
2016 in
$m
2015 in
$m
Net cash flow from operating
activities 2704 2819 2048
Net cash flow from investing
activities -2046 -1923 -944
Net cash flow from financing
activities -854 -1825 -1218
2017 in $m 2016 in $m 2015 in $m
-3000
-2000
-1000
0
1000
2000
3000
4000
Analysis of Cash Flow Statement
The above graph and table above presents the comparative evaluation of flow of cash from
particularly flow of cash from operating activities, financing activities and investing
activities. In essence, net cash inflow from specifically operating activities was recorded to
increase in 2016 to $2819 million in comparison to $2048 million in 2015. However, the
same declined to $2704 million during 2017. Again, net cash outflow of the firm for
investing activities increased to $1923 million as compared to $944 million. Again, the same
also further increased to $2046 million. Nonetheless, the net cash outflow for financing
activities increased during the year 2016 in comparison to 2015. However, cash outflow for
this activity was observed to decline during 2017 as compared to the year ago period.

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Requirement (iii)
Other comprehensive statement of income: Items reported in other comprehensive
statement of income
The comprehensive statement of earning of the firm Qantas Airways highlights other
comprehensive earning/loss for the particular year. This statement presents the statutory
profit for the financial year 2017 and 2016. Other comprehensive earning or else loss states
that Qantas Airways registered comprehensive income of $180 million, while company
registered other comprehensive loss of -$179 million. This statement also replicates total
comprehensive income of $1033 million in the year 2017 while the same was recorded to be
$850 million. The items that are essentially included in this section are the net exchange
variances from transactions of necessarily foreign operations that are taken under equity,
overall amount of reserve for foreign translations that are essentially transferred to net profit
as well as fair value adjustment on particularly hedging of cash flow (Miglani et al., 2015).
Requirement (iv)
The net exchange variances can be witnessed in effectual alterations in fair value of hedging
of cash flow that reflects drastic increase during the year 2017. Again, there is drastic decline
in the transfer of particularly hedge reserve to essentially consolidated income statement to -
$6 million from $198 million.
Requirement (v)
Reason why these items are reported in P/L statement
In essence, comprehensive income statement is necessarily utilized for the purpose of
enumeration of any kind of alteration in primarily interests of varied owners. In essence, this
takes into consideration the income along with expends that are not realised and is utilized for

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the purpose of sidestepping the earnings statement (Miao et al., 2016). In particular, other
comprehensive statement of earning considers certain items namely gain/loss from different
derivative instruments, effectual portion of alterations in specifically fair value of hedging of
flow of cash (that is net of taxes), transfer of reserve of hedge to mainly consolidated income
statement (that is net of taxes), identification of effectual hedge of cash flow on particularly
capitalised assets (that is net of taxes) (Kushnirenko, 2017). Also, this statement replicates net
alterations in reserve of hedge for particularly time value of specific options (that is net of
taxes). Furthermore, this statement includes foreign currency translation of varied controlled
entities, translation of foreign currency of necessarily investments that is accounted for
mainly under the equity mechanism and shares of diverse other comprehensive earning or
else loss of investments accounted under the equity method.
Requirement (vi)
The amount of income tax expenditure was registered to be -$328 million in 2017 and -$395
million. In essence, the income tax expenditure utilizes the domestic corporate rate tax of
approximately 30% and statutory profit before income tax expends are adjusted for non-
assessable dividends from particularly controlled entities, different non-deductible share of
particularly net loss for specifically investments accounted under equity system, varied non-
deductible losses essentially for foreign branches as well as controlled entity losses (Warren
& Jones, 2018). Adjustments also include usage of previously unrecognized losses of capital,
non-assessable gain on particularly disposal of PPE, other non-assessable items as well as
provisions from previous periods (Ijiri, 2018).

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Requirement (vii)
Amount of income tax is enumerated utilizing rates of tax that are imposed significantly by
the financial position assertion. The current expenditure on tax during the year 2017 was
recorded to be ($328 million) during the financial year 2017 while the same was registered to
be ($395 million) in 2016 as mentioned in the financial pronouncement. In essence, this
shows that the tax expenditure has escalated by around $67 million. Thus, it cannot be hereby
analysed whether figures for income tax expenditure are identical as that of the tax rate times
the total accounting earnings (Heese et al., 2015).
Requirement (viii)
The deferred tax (liabilities) or assets of the firm Qantas Airways stands at ($353 million
during the year 2017 whereas the same stands at $39 million. Essentially, deferred tax is
necessarily identified with regard to temporary variances between particularly carrying
amounts of specifically the carrying amounts of assets/liabilities for mainly pecuniary
reporting reasons and the total amounts utilized for taxation. Particularly, deferred tax assets
are necessarily identified for specifically unused losses for tax, unused credits for tax along
with deductible temporary variances to the particular extent that it is likely that taxable profits
in the upcoming period against which they can be utilized (Chaibi et al., 2014).
Requirement (ix)
The income tax expends for the financial year 2017 is recorded to be ($328 million) while the
same was recorded to be ($395 million). However, the income tax payable stands at ($4
million). A reconciliation of income tax expense of the firm Qantas Airways to particularly
income tax payable involves adjustments for mainly temporary variances. Adjustment for
temporary variances include adjustments for inventories, plant, property as well as

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equipment, payables, revenue that is received/accepted in advance, diverse interest bearing
liabilities, different financial assets, provisions, diverse other items and previous period
variances (Carnegie, 2014). Essentially, the temporary variances stand at $167 million in
2017 as against ($ 18 million). Therefore, the tax payable stands at ($4 million).
Requirement (x)
Analysis of the yearly financial pronouncements of the firm Qantas Airways reveals the fact
that the income tax expenditure reflected in the income assertion is not identical to that of the
income tax paid replicated in the statement on flow of cash. Essentially, payments for income
tax comprises of the influence of income tax of specific losses or else gains associated to
financing activities so that the after tax flow of cash is replicated in the subtotals of net flow
of cash. However, contrarily, expenditure of the company on the income tax is essentially the
amount that replicates recording of costs of income tax (Beekes et al., 2015).
Requirement (xi)
Based on the yearly report analysis of the firm Qantas Airways, it can be recognized that
charge for particularly current tax on earnings is made founded on adjusted profits that are
necessarily attributable for any disallowed else wise non-assessable item. Further, the notes to
the financial assertions deliver the numerical reconciliation of necessarily income tax
expenditure to amount of tax payable. This kind of reconciliation delivers information to
different users regarding the computation of this kind of income tax expenditure
(Balakrishnan et al., 2016). Thus, the striking part in association to realization of income tax
expenditures is necessarily reconciliation of temporary variance and any kind of amount of
net loss incurred after tax on earnings.

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