170518- 0629PM- cooperate_assignment_silsila
lii the dev sloping industrialisation em ironment, ct em company » ants systematic record of the dailj transaction for making the work hassle frcc and fast Thc accounting standard is applied for rccording thc company transactions systcmnticallj The WESFARMERS requires to maintain the three main principle accounting of financial statement (Income statement, Balance sheet and Cash flow statement) The detailcd report is discnsscd on the consccutii’c thrcc ycars cash flo» of Wesfariiiers and its transaction related to the income tax and the tax assets paj able by the company in the follo» ing year The reason for recording the deferred tax assets and liabilitics in thc balancc shcct has also bccn asccriaincd in this assignment.
Cash Flow Statement
The cash flow statement keeps track of the inflo» s and outflo» s of the company in » eekly, monthly or ycarlj basis.
The changes in cash flow of three consecutive year
After re iewing the last consecutii e three jear of the Wesfarmers cash flow statement, it is rccogniscd that the nct increases in thc cash bi thc company ix as $402 in 2G17. ($1 G0) in 2016 and $ 734 Total current assets » as $9fifi7 in 2017. $'2fiS4 in 2016 and $9093 in 2015. There is not much differences seen in the the current assets transaction. The changes obseri ed in the three ycar cash fJoii’ statcmcnt is the gro»’th pcrccntagc of the short tcnn irn’cstincnt bi Wesfarmcrs by 8'4 47% in 2017 » hich dcclincs to negatii c by -41 fi2% and •4fi. fi0% in 20.15. The total assets remained by Wcsfarmcr at thc cnd of thrcc i’ear ii as 2.77°a in 2015 and thus dccrcascd by 0.59% in 2016 to 1 6›1% and then incrcascd bi 2% to 3 09% in 2017. Thc asscts total grow th ii’as -
1 35% in thc j ear 2017.
Analysis of Irn’csting actii’itics, Financial actii’itics and ot›crating actii’itics of
Investing activities - The expcnses on the fixed and long tetni assets by thc company dcterinines thc ini’esting actii’itics of the cash flow’ According to thc listing itcms in thc cash floor statcmcnt the long term investment screens. gross investment on plants and equipments are $'7440 in 2017, ii hich ii as loci er in 2010 by $90.12 and highcr in 2G15 by li10.205 Thc acciiinul;1ted dcprcciation inadc bi Wesfarincrs on plant and machincri ii’as $9250 in 2G17 dccrcascd bi
$5478 in 2016 and Ion er by $ 2000 in 2015
Financial actii’ities - the cxpenses on the shares and dii’idcnds bi Wesfarmer and selling of the company shares and equity determines the financial actin itv of the company . The net cash flow in the financing actin ities by Wesfariners i as -3771 in 20.17. -1333 in 201fi and -3294 in 2015. The borrow ing proceed. repaymcnt and the equity dii’idend paid makes up thc ini’esting statement of Wesfarmers.
oi› er ating activities - the operating actii’ities determinc thc nct plan to iinpleincnt the new
project. Thc operating actix’ities of the Wcsfanncrs in thc conscciitii c three i ears indicatcs the receipts from the customer. The net operating cash outflo» form Wesfariners in 2015 ii as
$1898 has incrcased by $2GG0 in 2G 16 to $i3365 and $4226 in 2017
Nct changes obscri’cd in the cash flows actii’itics ii’as $1356 has drastically dccrcascd to $ 1 G0, In the year 2017 the Wesfarmer had a positii e impact of the actin ities by $402.
5. Co•i rchcnsive Income statcment
The incomc statcmcnt includes the sales. tax cxpcnscs. discounts. financial cost and thc sharc of profit bj the company The coinprehensii e income tax sho» s the status of the firm income rcgarding the dcrii’atii’cs cxpcnscs. It is gcnerally not recorded in the profit and loss statcment.
Explaining the items reported in comprehensive accounting
The comprehensive financ iaI statement includes the component of sale, e xpeiises. taxes and intcrcst. Thc share of profit attributed to thc Wcsfarincr partncrs »’as $2573 in 2G17. Thc rcscri’c funds of Wesfanners » as $2 million » hcrc thc unrealiscd loss incurred bj the company of
$(136) has bccn idcntificd. Thc realised cost on losscs rccoi’ercd and transfcrrcd ($92) to nct profit. In thc coinprchcnsii’e incoinc statcincnt thc iax effcct and rcmcasiircmcnt loss on thc plan profit i ould not bc includcd to Profit and Loss account. At the end of the financial j ear the attributcd profit amount sharcd to thc incmbcrs of Wesfarincr was $2891.
Discussing the reason for incluiling such item in comprehensive income statement
The clcincnts recorded in coinprcliensii e income statcinent are infrequent in nature and docs not inciirrcd usually. Thc gains from changes in thc stock markct is accorded in thc coinprchensii’c account as an inflated namings ii hich could probably be deflated in nature. The assets and liabilitics of Wcsfarmcrs in thc comprchcnsii’c incomc statcincnt is $2 million ii’hich ii’as translatcd atc thc exchangc ratc of Australian dollar as pcr thc riilcs of balancc shcct of the company . The income stateiiieiit is also translated at the exchange rate to the average This differences detcnnined from the exchangc rate is counted directly in the element of equity of the Wesfarmers
Explaining the reason for not including such items in P/L account
The losses and gains from the derry atix’e coinponcnts. the unrcaliscd sccurities debt. gains and losses froiii pension and retireiiient. foreign exchanges of currency are the elements that occur rarely from thc smaller sector of business. The oi’crseas operating affect thc company performanccs thus it is not accounted in Profit and loss account The corporate accounting standard ascenain the income statement of the organisation by acceptmg the rules of principle under Gcneral accounting standard Act. thus this docs not permit the dern’aiive income and
expenses to record in profit and loss account of the company for showing extra expenses and retrieving profit therefrom
4. Income tax accounting
Explain the firms latest tax expenses
The figure given above indicates the tax borne and collected by Wesfarmers in 2017. The tax is contributed to the Australian state and federal government. The total proportion of Wesfarmers in global taxation payment is $2.1 billion in the year 2017. The company collected $4.8 billion which is directly attributable to the Pay As You Go (PAYG). The payment of the collected tax is made on the behalf of Australian government for wine equalisation tax (WET) and GST on excise and custom duty. increase in the rate of custom duty has increased the payable taxes of Wesfarmer in 2017. The table comprises the tax paid and collected by Wesfarmers in 2017 is
$4.8 billion and 44.3 billion in 2016.
Discuss the reason, the tax expense is similar to the company tax rate
The private limited company is not fully attributable to the rate of income tax as applied to the joint venture organisation. The rate of tax is still being imposed on the corporate sector by the government for operating for motive of self profit within state. The imposition of rate of tax is on the profit made by the company in the taxable financial year. This kind of taxes are imposed by the government of the state which varies according to the different state and location. The lesser rate of tax imposed on the organisation would bring higher profit rate and enhances the environment of economic. The imposed rate of tax subsidised the investment on the business by the government.
Explain why deferred tax assets and liabilities is recorded in balance sheet
The deferred asset of Wesfarmer is $971 in 2017 and 1042 in 2016, it accounts for the difference in taxes remained unused. or taxes carried forward an losses. The deferred tax is the taxable income which is available to the company for future use. The deferred tax is applied on the assets at the rate of tax when it is recoverable or on the settlement year of the liabilities. The Wesfarmers has unrecognised profit which is carried forward as capital loss, which could be
offset by capital gain Thc dcfcrrcd iax of thc company in 2G 17 is $127 million and $130 million in 201fi. the total loss of capital.
Elaboratc thc company income tax or current tax assets pa› able b› the comm and
The tax expeiises is o» ed by the organisation according to the standard accounting business rules and recorded in the income statement The tax paj able is the rate of actual tax based on the code of tax rule. Thc tax payablc is accoiintcd as liabilities in thc balancc shcct until it is scttlcd as pcr bill of tax Thc income tax expenses is calculated bj multiplying tlic profit bj the tax rate of organisation for thc tcmporan diffcrcncc The corporate iax ratc is 3G% in Australia In the balancc shcct thc incomc tax is calculatcd by multiply ing the rclci’ant tax rate of the company The incoinc tax in balance shect is accounted for the adjustment of both temporarr and non tcinporan’ diffcrcnces. Thc income tax payablc bi Wcsfanncrs in 2017 is $1205 ii’hich ii’as lG% loci er bj $984 in 2016. The accounting profit i as $413S and its income tax rate » as30% according to thc Australian statutorr rate of income tax The non tcmporan differeiiccs obscrved by Wcsfarmcr income tax ratc is $12 and tcmporan diffcrcnccs is $3.7 Thus thc incomc tax rate paj able by Wesfarmers realised was $1265
Explain the income tax recorded in Income statcmcnt is same as in the cash flow or not The income tax cxpcnscs in thc cash flow statcment is rccordcd as thc opcrating actii’itics and added to the depreciation to the profit before taxes and then deducted from the tax. The income tax paid accounting in the cash floor statelnent short s the incoming made bi thc compare on ongoing actin ities The income tax paid bj Wesfarmers recorded in cash flow is $951. In income statement the income tax paid is calculated after aggregating the income of the financial year. The profit is thcn dcducting from the tax paid ratc for estimating the Net profit of the i car. Thus income tax expenses accounted for $1,265 in income statement of Wesfanners.
E› i›*aining the insight of tax inclusion in the financial statement
Tax expenses or charge on iax is the income tax is multiplied to the rate of tax. The organisation prepare the profit and loss account i here the profit is calculated before payin g income tax This statemcnt is reported to thc goi’ernment. The nct profit incurrcd in income statcment after payment of tax is remained ii‘itIi the organisation for picturising the oi’erviei the profit and loss
of thc financial ycar Thc goi’crnmcnt i’ia tax trics to cnhancc the sai’ing habit of thc company and exempt the interest on income and proc ides the option of long term tin estment at the lo» er ratc likc gains on capital The foreign tradc is bnlnnced bi thc goi’cmincnt b;’ disallow ing thc thc transport expenses dcduction and foreign exchanges
Thc Wcsfarmcr has trade rcccii’ablc tcnninatc upto 3G days . The compare is rccommcndcd make alteniate changes in the implementing plan for paying off the debt incurred and replacing the » ritten off from the aIIo» ances account. The recei able is trade value could be recognised at thc fnir i’aluc and »’ould amortiscd thc cost bi thc incthod of cffcctii’c intcrcst i’aluation. Various debtors are arised from thc transaction of the financial year 2017. The company also had rccogniscd soinc unpaired assets in the incomc statcmcnt. Thc rcccii’ablc of the short term nature arc not discoiintcd. as thc discounting of such assets is immaterial. Thc alloii’ancc account records the debt » rittcn off the uncollectiblc debts. on time.
For analysing the company status thc preparation of three financial statement is coinpulsorr. The Comprehcnsii e income statement and rei ice of the financial statcinent of Wcsfarincr indicates thc unrccogniscd assets and short tcnn cash rcccii’ablcs ii’ith tcrm of 3G days Thc true and i ulnerable preparation of financial statement ii ould picturise the i iei of financing status and the royalty rcport of the organisation It ii ould attract thc intercst of the irn’cstors and cxpand the share markct of compare The underlying profit carncd by Wcsfanncrs at thc cnd of the j ear ii as
$4138 and the earning per share ii as $354.2. The corporate accounting is a single company accounting and thus proi’ide the clear i’ieix of thc organization and does not include the derii atii e income or expenses. The deferred tax on assets of Wesfarmers is also not paid off and recorded as the liabilities of the company in the balance sheet
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