HI5020 M1

Corporate Accounting

Individual Assignment

Trimester 2018

Unit Code: HI5020

Unit Name: Corporate Accounting

Instructor Name: Anisur Rahman

Student Name: Ali Raza Naveed

Student ID: CEM2108

2000 words
 TABLE OF CONTENTS

INTRODUCTION...........................................................................................................................1
CASH FLOWS STATEMENT........................................................................................................1
1. Items of cash flow statement..............................................................................................1
2. Cash flows attained in previous years................................................................................3
OTHER COMPREHENSIVE INCOME STATEMENT.................................................................3
3. Items of other comprehensive income statement of past years..........................................3
4. Explaining each items of statement....................................................................................4
5. Analysing the reasons behind not including several items in income statement................5
ACCOUNTING FOR CORPORATE INCOME TAX....................................................................5
6. Ascertaining the latest tax expenses of Grain Corp. Ltd....................................................5
7. Similarity between the tax rate times of Grain Corp. Ltd..................................................5
8. Commentary based on deferred tax assets/ liabilities reported in balance sheet................6
9. Presenting current tax assets or income tax payable reported by firm...............................6
10. Is the income tax expense and income tax paid are similar.............................................6
11. Treatment of tax of Grain Corp Ltd..................................................................................6
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8
INTRODUCTION
Managing the business accounts in the most prominent ways which will be effective and
efficiency for the business as to have satisfactory rise in the income and operational viabilities of
firm. Moreover, in the present report there will be discussion based on analysing the financial
health of Grain Corp. Ltd. Over the period. The financial data set of this business will be
analysed as well as studies in terms of reaching to the concrete solutions.

CASH FLOWS STATEMENT

1. Items of cash flow statement

Particulars 2017 2016 2015

Customers' Receipts 4824.1 4350.5 4315.5

Payments made to
suppliers and employees -4505.3 -4125.7 -4006.9

318.8 224.8 308.6

Proceeds of borrowings
(funding of stock) 42.2 -4 9.1

Interest received in a
year 2.4 1.3 2.6

Interest paid in year -41.9 -38.4 -42.6

Income taxes paid in

year -21 -32.2 -6.6

Net cash flow from

operating activities 300.5 151.5 271.1

Payment made for

Property, Plant and
Equipment (PPE) -199.7 -268.2 -223.6

Computer software
charges paid -26.5 -7.9 -12.8

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Proceeds of sale of PPE 34.8 4.4 6.2

Proceeds from
investment business or
sales 106.6

Investment Payments -35.6 -5.9 -2.3

Dividend paid 83.2 0.2

Loans repaid by parties 19.1

Net cash outflow from

investing activities -37.2 -277.6 -213.2

Proceeds of banks 941 801.1 679.8

Loan Repayment -1080.7 -696.6 -561.8

Paid dividends -42.3 -22.9 -28.6

Non-controlling interest
(NCI) in period 1.5

Bought treasury shares in

a year -4.1

Net cash flow from

financing activities -184.6 81.6 89.4

Net decrease / (increase)

of cash and cash
equivalents (CCE) 78.7 -44.5 147.3

Opening balance 307.6 374 206.2

Effect of Exchange rate

in a year 2.6 -21.9 20.5

Closing balance 388.9 307.6 374

The cash flow statements are being formulated for three years in the best possible
manner. It is justified in the past years that firm is able to perform good and as such, cash
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position is good which is required so that it may perform well in future operations. Grain Corp
Ltd had customer receipts of 4315.6 in 2015, increased to 4350.5 in next year and further in 2017
as well. Payments to suppliers and employees are maximised (Tahat, Omran and Dunne, 2017).
Borrowings in 2017 has hiked to 42.2 which was -4 in 2016 and 9.1 in 2015. Interest received is
maximised in the latest year and interest paid have been accounted for and increased as well.
Income tax paid in 2017 was 21. Payment from PPE is increased in recent years. Computer
software payment is accounted for and maximised to 26.5 in 2017. Sale of PPE is increased and
cash inflow is being generated. Loans repaid to parties are made in 2015 only and as such, no
after payments were made. Proceeds from bank is maximised as it was 679.8 in 2015, 801.1 in
2016 and maximised to 941 in 2017. Loans repayments are increased in the latest financial year.
Treasury shares are purchased amounting to 4.1 in 2017. Thus, overall cash position is good in
2017 as opening balance was 307.6 and increased to 388.9 at the end.

2. Cash flows attained in previous years

It can be analysed that cash flow position of Grain Corp Ltd is well enough in the past
financial years (Liu, Li, Zeng and An, 2017). It is evident from the fact that cash flows from
operating activities are increased as it was only 275.1 in financial year 2015 and raised to 151.5
in 2016 and further maximised to 300.5 in 2017 which shows cash is generated effectively.
Investing activities are good as non-current assets are sold and cash has been produced.
Financing activities were 89.4 in 2015 while, it became -184.6 in 2017 which means outflow is
accomplished as cash is used in paying dividends. However, cash position is good.
OTHER COMPREHENSIVE INCOME STATEMENT
3. Items of other comprehensive income statement of past years

Particulars 2017 2016 2015

Income 125.2 30.9 32.1

Other comprehensive income

Items not reclassified to Profit

and loss account

Retirement benefit's obligation 12.7 -17.4 -1.1

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(Remeasurements)

Income tax on such items -2.9 2.6 0.6

Items reclassified to Profit and

loss account

Changes found in fair value of

cash flow hedge in a period 28.6 4.6 -21.6

Shares of incomes of joint

venture -0.1 0.1

Income tax on items -6.8 -2.1 5.2

Exchange difference of foreign

business operations 2.1 -78.4 89.2

Other comprehensive income

obtained (Net tax) 33.7 -90.8 72.4

Total comprehensive income

available to equity shareholders 158.9 -59.9 104.5

Total comprehensive income

provided to:

Parent entity equity holders' 158.9

Non-controlling interest (NCI)

158.9 -59.9 104.5

4. Explaining each items of statement

The statements are prepared for three years and items are not included in income
statement as gains, losses are not being realised by the firm. Remeasurement retirement benefits
obligation was -1.1 in 2015, increased to -17.4 in next year, while it was 12.7 in 2017. Income
taxes are paid. Changes in fair value in cash flow hedges are increased in 2017. Exchange
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differences are taken into account and increased. Thus, net income is 158.9 in 2017 which was
-59.9 in 2016.

5. Analysing the reasons behind not including several items in income statement
The items which are not being recorded in the income statement of the firm which are
mainly relevant with the joint venture expenditure, cash flow items etc. income statements is
comprises with the transactional entities of all the operating activities. The costs which are
incurred in the production such as direct labour, material and the various overhead expenses as
well as other relevant expenses will be recorded in the operations. There will not be any record
of deferred tax payment, debtors, creditors etc. as these are not involved in the operational
practices they are relevant with the capital expenditures of firm.

ACCOUNTING FOR CORPORATE INCOME TAX

6. Ascertaining the latest tax expenses of Grain Corp. Ltd.
There has been consideration over the financial statements of firm with consideration of
two financial periods such as 2016 and 2017. Therefore, in the current times the taxable
payments made by entity in 2017 as 9.6 while in 2016 it was 34.3 million. However, the firm has
gathered the appropriate revenue on which they have made tax payments for 59.5 in the current
year (Grain Corp. Ltd annual report, 2017). In 2016 they have made the tax payments for 11.4.
Thus, it can be said that with respect top previous year this year firm has made less taxable
payments such as 32.2% in 2017.

7. Similarity between the tax rate times of Grain Corp. Ltd

In relation with analysing the tax rates times of gain corp. Ltd. It can be said that there are
various operations which will be effective and helpful as to be analysed here. The income tax
expenses made by firm in 2017 as 59.5 which 32.2% of the payments made by them over their
generated income. On the other side, in 2016 they have made payment of 11.4 as taxable
payment which the influences of various tax rates such as 33.3% of their generated income.
Therefore, it can be said that in both the years the firm has made effective taxable payments over
the gains which is somehow reflected the same proportionate expenses.

8. Commentary based on deferred tax assets/ liabilities reported in balance sheet

There has been various taxable payments made the firm in the business which will be
effective and helpful as to make the appropriate analysis over the business strength. However, in
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relation with analysing the deferred tax payment which were being made by the firm in the
period over its assets and liabilities. Differed tax assets for the year 2017 was 37.6 while in 2016
it was 71.2. Similarly, the deferred tax liabilities of firm in the year 2017 was 80.6 while in 2016
it was 60.7.

9. Presenting current tax assets or income tax payable reported by firm

The accounting income and taxable income are not similar to each other. The balance
sheet is the snapshot of the organization and the amount of current tax assets are even not similar.
It could be assessed that 1.1 as an amount has been tracked in the year of 2015 which has been
maximized in the year of 2016 as 2.5 and in the year 2017 it is represented as 16. Hence, it has
been clearly analyzed that liability of income tax will be raising in future as there is
maximization is current tax assets (Ijiri, 2018).
10. Is the income tax expense and income tax paid are similar
The reported income tax expense in the income statement is not similar to the paid
income tax which has been listed in cash flow statement. The variations are due to accounting
regulations and rules with perspective of financial reporting and it is distinguished when
computation of tax has been done and along with this, figures which are obtained are not similar
to each other. The amount of tax which is finalized can be attained and it should be payable on
profits which varies from the actual tax bills. It can be clearly depicted from the financial
statements that 59.5 is stated as income tax expense in the income statement. On its contrary,
Grain Corp Ltd has paid income tax in year 2017 is of 21 which varies from other and it can be
said that they are not similar.
11. Treatment of tax of Grain Corp Ltd
According to the accounting policies and rules which are adopted by various
organization, tax has been treated very differently (Duru and et.al., 2018). It has performed
proper analysis of Grain Corp Ltd, that different tax has been computed for the current financial
year. Straight line method has been selected by the organization and according to it fixed assets
are depreciated. Current liability which has been paid in the present year is income tax. 30% tax
rate has been applied, as it is according to rate of Australian government. Deferred tax is not
applied on the items where determining assets and liabilities and goodwill will be not having any
impact on the income of Grain Corp Ltd. Hence, consolidated tax group is purely headed by

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presence of agreement in tax so by summing up the treatment of tax of this company is very
interesting to understand (Harris and Stahlin, 2018).
CONCLUSION
From the above report it can be concluded that for enhancing decisions financial
statements are properly utilized by each and every party. Scrutinizing financial gives major
benefit to external users of management and accounting information related to Grain Corp Ltd.
Further it has been concluded that expense of income tax always differs from the corporate tax
rate times the accounting income. Hence, they create the better opportunity for taking better
decisions which also leads to creating effectual opportunity.

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REFERENCES
Books and Journals
Duru, A., and et.al., 2018. Bank accounting regulations, enforcement mechanisms, and financial
statement informativeness: cross-country evidence. Accounting and Business Research.
pp.1-35.

Harris, P. and Stahlin, W., 2018. GAAP to IFRS Income Conversion Case Study: An
Examination of SEC Noted Accounting Differences. The Accounting Educators'
Journal. 27(1).

Ijiri, Y., 2018. An Introduction to Corporate Accounting Standards: A Review. Accounting,

Economics, and Law: A Convivium. 8(1).

Liu, Y., Li, X., Zeng, H. and An, Y., 2017. Political connections, auditor choice and corporate
accounting transparency: evidence from private sector firms in China. Accounting &
Finance. 57(4). pp.1071-1099.

Tahat, Y., Omran, M. and Dunne, T., 2017. Development of Accounting Regulations and
Practices in Kuwait: An Analytical Review. Journal of Corporate Accounting & Finance.
28(6). pp.14-28.

Online
Grain Corp. Ltd annual report. 2017. [Online]. Available through
:<www.graincorp.com.au/_literature_235571/2017_Annual_Report>.