Corporate Accounting Project Report: Qantas Ltd Financial Analysis

This project report offers a comprehensive analysis of Qantas Limited's corporate accounting practices, focusing on the company's financial performance and position. The report examines the cash flow statement, comparing data from 2015 to 2017 to assess changes in operating, investing, and financing activities. It also analyzes the comprehensive income statement, highlighting the items included and the reasons for their treatment. Furthermore, the report delves into Qantas's tax expenses, comparing the reported tax amount with the accounting profit and exploring the deferred tax amount and current tax liabilities. The analysis provides insights into the differences between tax expenses and actual tax payments, detailing the factors influencing these discrepancies, such as deferred tax assets and liabilities. The report concludes by summarizing the key findings and implications of the financial analysis, offering a clear understanding of Qantas's financial health and accounting practices.

Running Head: Corporate Accounting
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Project Report: Corporate Accounting

Corporate Accounting
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Contents
Introduction.......................................................................................................................3
Company overview...........................................................................................................3
1. Cash flow statement analysis........................................................................................3
2. Comparative analysis on cash flow statement..............................................................4
3. Comprehensive income statement analysis..................................................................5
4. Comprehensive income statement items......................................................................6
5. Reasons.........................................................................................................................6
6. Tax expenses of the company.......................................................................................6
7. Similarity in tax expenses.............................................................................................7
8. Deferred tax amount.....................................................................................................7
9. Current payable or receivable tax.................................................................................7
10. Differences in tax amount...........................................................................................8
11. Tax treatment..............................................................................................................8
Conclusion........................................................................................................................9
References.........................................................................................................................9

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Introduction:
Corporate accounting is an accounting branch which deals with the company’s
accounting process, preparation of final statement of the company and records all the
financial data of the company in proper way. In this report, accounting process of the Qantas
limited has been evaluated to measure the performance and the position of the company. The
main focus of the report is on the income statement, cash flow statement and the tax
treatment of the company. It identifies and measures the various values of the taxation in the
annual report of the comapny and identifies the tax recording process and the accounting
standards of the company.
Company overview:
Qantas limited is largest airline company in the Australian market. The company is
operating the activities through various subsidiaries companies such as Jetstar, Qantas
domestic airlines, Qantas international airlines etc. the company offers different deals and the
different services through its various subsidiary company. The company has diversified its
market at international level and currently, it is managing its business at around 65
destinations at international level (Our Company, 2018). The annual report (2017) of the
company explains that the company has followed AASB rules to record and perform the
accounting activities and process of the company.
1. Cash flow statement analysis:
Cash flow statement is a financial statement which explains about the changes into the
cash flow of the company in a specific time period. It evaluates the changes in the cash
position of the comapny and explains about the liquidity position of the company to the
stakeholders of the company.
Annual report (2017) of the company explains that the cash flow position of the
company has been changed from 2016 to 2017. Firstly, it has been found that the revenues
and the non cash items of the company have affected the operating activities cash position of
the company. It explains that the cash position has been lowered due to higher cost of
revenue of the company (Tran, 2015).
In addition, the changes have been identified in the property, plant and equipment of
the company. The investment has been lowered by the company and due to it; the investment

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position of the company has been improved. Further, the company has also lowered the
investment purchase of the company because of industry performance.
The debt payment amount of the company has been improved by the company and the
company has repurchased the t stock from the market which has lead to the company towards
the huge cash outflow.
Statement of CASH FLOW
Fiscal year ends in June. AUD in
millions except per share data.
2016-
06
2017-
06
Cash Flows From Operating
Activities
Other non-cash items 2819 2704
Investments in property, plant, and
equipment -1618 -1368
Property, plant, and equipment
reductions 509 34
Purchases of investments -39 -16
Debt repayment -453
Repurchases of treasury stock -1080 -564
(Annual report, 2017)
It explains that various factors have affected the cash position of the company from
last year and due to it, the net cash flow of the company has also been lowered.
2. Comparative analysis on cash flow statement:
The cash flow position of the company has been compared with the cash flow position
of last 2 years of the company to measure the performance of the company. the operating
activities has been evaluated firstly and it has been recognized that the cash flow position of
the company has been enhanced from 2015 but lowered from 2016 due to changes into the
revenue position of the company.
In addition, the cash flow from investment activities of the company has been lowered
by a great level due to the huge investment in the property, plant and equipment by the
company (Brigham and Ehrhardt, 2013). The financing activities cash flow further explains
about the increment cash inflow position of the company. It explains that the company has
not repurchased the T bills more in current year and due to it, the financing position has been
better from the last year.
Statement of CASH FLOW

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Fiscal year ends in June. (Amt in AUD
million)
2015-
06
2016-
06
2017-
06
Net cash provided by operating activities 2048 2819 2704
Net cash used for investing activities -944 -1923 -2046
Net cash provided by (used for)
financing activities -1218 -1825 -854
Net change in cash -93 -928 -205
It further explains that due to total changes in all the activities of the cash flow
statement of the company, net changes in the cash flow have been improved.
3. Comprehensive income statement analysis:
Those profitability items which cannot be added into the income statement of an
organization because of some accounting policies are recorded in other income statement
which is called comprehensive income statement. According to the annual report (2017), it
has been found that the comprehensive items of the company have been enhanced the total
profit of the company by $ 180 million in 2017 whereas the comprehensive profit of last year
was $ -179 million. It explains that the total comprehensive income statement of the company
has been improved from the last year and explains about the better position of the company.
Figure 1: Comprehensive income statement

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(Annual report, 2017)
4. Comprehensive income statement items:
The main items of comprehensive income statement of the company is changes in the
fair value, net changes in the cash flow hedges, exchange rates, foreign currency investment,
loss of investment, taxation value etc. all of these factors are not related with the daily
activities and the operations of the company (Watson, 2017). These all factors are fluctuated
and cannot be recorded by the company in its annual reports because of some accounting
policies and the income statement preparation method.
5. Reasons:
On the basis of the study on comprehensive income statement and the items of
comprehensive income statement, it has been found that those profitability items which
cannot be added into the income statement of an organization because of materiality policies
and fair accounting policies are recorded in other income statement which is called
comprehensive income statement (Morris, 2017). The main reason behind not adding the
items in the income statement of the company is that these factors are not related to the
operating and non operating activities of the company and have been generated due to market
factors. Thus, it could affect the profitability level and manipulate the stakeholders of the
company.
6. Tax expenses of the company:
Tax expenses of the company have been evaluated further. Annual report (2017)
explains that the total tax expense of the company have been lowered from last year in 2017.
Tax expense explains about the total amount which has to pay from the accounting profit of
the company to the Australian government (Larson et al, 2017).
Particular( $ in millions) 2016 2017
Income tax expenses 395 328

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Annual report (2017) explains that the total tax expense of the company are $ 328
million which has been lowered because of less revenue of the company as well as the better
policies of tax planning of the company.
7. Similarity in tax expenses:
The tax amount is calculated on the basis of the accounting profit of the company. But
the annual report (2017) explains that the total accounting profit and the taxation amount of
the company is different from the tax amount which has been changed by the company in the
annual report.
The accounting profit of the company is $ 8520 million. Thus, the taxation amount
should be $ 255.6 million (852*30% = $ 255.6). But the taxation amount of the company is $
328 million (Kim, 2017).
The reason behind such difference among the taxation amount and accounting
taxation amount of the company is various other taxation policy of the company due to which
the company is not required to pay $ 328 million. The tax amount has also been enhanced by
the company due to current tax liability and the deferred tax liabilities of the company.
8. Deferred tax amount:
Deferred tax amount of the company has identified further in the annual report. The
deferred tax amount is the difference among the tax amount paid and the actual tax amount
which has to be paid by the company. On the basis of the annual report, it has been found that
the deferred tax revenue and the assets of the company in the balance sheet of the company
has been improved in 2017 from last 3 years and it briefs that the company has paid extra
amount as taxation to the government (Landoni and Zeldes, 2017).
QANTAS AIRWAYS LTD (QAN) CashFlowFlag
BALANCE SHEET
Fiscal year ends in June. AUD in
millions except per share data.
2015-
06
2016-
06
2017-
06
Deferred income taxes 333 39
Deferred revenues 3584 3525 3685
Deferred taxes liabilities 353

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It also explains that the deferred tax liabilities have also taken place in the year of 2017
which explains about the liabilities about the company in case of taxation. It explains that the
company has to pay extra $ 353 million as tax amount to the Australian government.
9. Current payable or receivable tax:
Current tax liabilities and assets brief about the taxation amount which has to be paid or
had paid by the company in advance. The annual report (2017) explains that the current
income tax liabilities of the company is $ 4 million and the assets of the company is zero
which explains that the company would pay $ 4 million amount to the government in the next
year (Ho, 2017).
Particular (Amount in AUD
million)
2016 2017
Income tax payable 0 4
The income tax payable amount is not same as the income tax amount in the income
statement of the company because the company has paid some of the taxation amount in the
current year already and which has lead to the balance $ 4 million of taxation amount to the
company.
On the basis of the evaluation on the balance sheet of the company, it has been found
that only these amount which has not been paid by the company in the current year or which
is still outstanding from the last year is shown in the balance sheet of the company. Rest
amount is shown by the company in its cash flow statement to show that how much amount
has been paid by the company as tax amount in current year.
10. Differences in tax amount:
The income statement explains that the total tax amount of the company in the current
year is $ 328 million and the cash flow statement briefs that only $ 4 million has been paid by
the company in the current year as tax amount. It explains that there is huge difference among
the actual tax expense and the tax amount paid b the company (Gorry et al, 2017).

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These changes have taken place due to various internal reasons of the company such
as company has already paid extra amount to the government of the country and it is recoded
as deferred tax assets in the annual report of the company (Bardley, 2017). So, the company
has paid only $ 4 million in the current year.
11. Tax treatment:
The annual report explains that the treatment of the tax has been done in a better way
by the company. The tax treatment of the company explains that the company has followed
the ASSB 112 rules to record the taxation amount in the annual report of the company.
The above study was quite interesting due to the various taxation figures and their
different recording system. Every taxation figures have a note attached to it about it’s derive
and the reasons behind the figures,
The story was quite interesting because of various surprising elements. Various new
things have been learnt in the report and it has been found that how the different amount of
the taxation could is recorded in the annual report of the company.
Further, the main confusing point in the report was the deferred tax liabilities and the
current tax payable figures and the main difference among both the factors.
Conclusion:
To conclude, the Qantas limited has followed the international accounting rules and
AASB rules to measure the performance and the position of the company. It explains that the
company has performed a better process in recording and presenting the accounting and
financial transactions of the company in the annual report.

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References:
Annual report. 2017. Qantas Airways limited. (Online). Available at:
http://investor.qantas.com/FormBuilder/_Resource/_module/AH_NGR9NxUaXc0W8Qv3Kf
g/docs/QantasAnnualReport2017.pdf (accessed 24/5/18).
Bradley, S., 2017. Inattention to Deferred Increases in Tax Bases: How Michigan Home
Buyers Are Paying for Assessment Limits. Review of Economics and Statistics, 99(1), pp.53-
66.
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice.
Cengage Learning.
Gorry, A., Hassett, K.A., Hubbard, R.G. and Mathur, A., 2017. The response of deferred
executive compensation to changes in tax rates. Journal of Public Economics, 151, pp.28-40.
Ho, A.T., 2017. Tax-deferred saving accounts: Heterogeneity and policy reforms. European
Economic Review, 97, pp.26-41.
Kim, J.H., 2017. What Really Determines the Information Content of Tax Expense and
Deferred Tax?. 회회회회회, 42(2), pp.1-44.
Landoni, M. and Zeldes, S.P., 2017. Should the government be paying investment fees on $3
trillion of tax-deferred retirement assets?
Larson, M.P., Lewis, T.K. and Spilker, B.C., 2017. A Case Integrating Financial and Tax
Accounting Using the Balance Sheet Approach to Account for Income Taxes. Issues in
Accounting Education, 32(4), pp.41-49.
Morris, J.L., 2017. Classification of Deferred Tax Assets and Deferred Tax Liabilities: An
Evaluation of FASB's Attempt at Standards Simplication. Journal of Accounting and
Finance, 17(8), pp.198-208.
Our company. 2017. Qantas Airways limited. (online). Available at:
https://www.qantas.com/travel/airlines/company/global/en (accessed 24/5/18).

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Tran, A., 2015. Can taxable income be estimated from financial reports of listed companies in
Australia?. Browser Download This Paper.
Watson, L. 2017. Discussion of'Does the Deferred Tax Asset Valuation Allowance Signal
Firm Creditworthiness?'.