(i) From your firm’s financial statement, list each item of equity and write your understanding of each item. Discuss any changes in each item of equity for your firm over the past year articulating the reasons for the change.
Every company has their own financial statement that has reports like the financial balance of the company, the balance sheet of the company and the other cost related calculations of the company. In every financial statement or balance sheet, there are different variables that are important to be considered in order to identify the financial statement of the company, the balance sheet of the company and the taxation report of the company. In accordance to the annual report of the company Arena Reit Stapled, the balance sheet that has been reported in accordance to the financial statement of the company, there are various variables that are important to be considered to identify the necessary calculations to identify the financial condition of the company. In the balance sheet, one component that is important to be considered is the equity items. Equity stands for the asset values, which is less than the amount of liabilities present on the asset. In the balance sheet of the company Arena Reit Stapled, the equity items that has been identified are the accumulated profit, contributed capital and the non-controlling asset (Brooks, 2015).
Contributed capital can be defined as the entry that gives the details of the total value of the stock that has been brought by the shareholders directly from the company. According to the balance sheet the company it can be noted that in the year 2015, the contributed equity for is accounted to be $191,845,000, which was increased to an amount of $197,224,000 for the year 2016. The second item of equity that has been listed is the accumulated profit, which can be stated as the total sum of the profits that has been gained by the company after the dividend payments. In accordance to their balance sheet, it has been noted that for the year 2015 the accumulated profit amounts to $61,900,000 that was increased to an amount of $99,187,000 for the year 2016. The third item that has been listed in the equity section of the company is non-controlling interests that can be stated as the interests present in the ARF2 and ARL that has not been held by the ARF1 neither directly or indirectly. For the year 2015, the non-controlling asset is amounted to be $49,746,000 that was increased to an amount of $61,082,000 (Westermann et al, 2017).
(ii) What is your firm’s tax expense in its latest financial statements?
The income tax expense or the revenue for a given time can be calculated as the tax that is payable for the current time’s taxable amount income. This amount is based on the income tax which is applicable for each of the jurisdiction that has been adjusted by the changes which is present in the deferred tax assets and liabilities that is attributed to the differences that are not fixed and also to the tax losses which has not been used. For the company the current income tax report states the different deferred taxes that has been standing in the tax report of the company. Deferred tax can be stated as the liability that has been recorded on the balance sheet, which is the difference in the income recognition that is present between the tax laws and the accounting methods (Dhaliwal et al, 2014). In accordance to the balance sheet of the income tax that is to be payable by the company, it has been noted that for the year 2015, the tax that is applicable in accordance to the Australian tax rate is 30%. This is accounted to be $18,290,000 while the tax that is to be payable in the year 2016 has risen to $21,786,000. In accordance to the profit that is to be gained by the company due to the tax payment which is liable and not liable is has been noted that for the year 2015, the amount is $18,940,000 which has risen to an amount $21,999,000. Another important consideration, which is the deferred tax amount that has not been recognised, is $256,000 for the year 2015 and for the year 2016, the deferred tax amounts to $213,000 (Kleven et al, 2016).
(iii) Is this figure the same as the company tax rate times your firm’s accounting income? Explain why this is, or is not, the case for your firm.
For any company the tax rate can defined as the corporate tax rate, which is to be incorporated in the company or the business entities that are present in the company with the help of tax bodies. For the company Arena Reit Stapled, the tax rate that is repent in the current times is based on the Australian income taxation methods which is stated to be 30% for the given period. It can be gathered format be given report that the revenue of the company is different in comparison to the tax which is payable by the company. It can be noted that the tax expense of the company is in accordance to the amount of tax that is to be paid by the company. The tax payment rate that is present in the current time shows that the tax payable has been increasing for the company. This increase in tax payable is because the tax rate keeps on increasing every year. For the company this is the case due to the fact that on the comparison between the company’s trade and the existing industry will be less as compared to the payment rate for the company that shows the huge amount of tax that is to be paid by the company. This tax payment is in accordance to the compilation of the company's tax rate payment and the Australian Tax rate present. It has been noted that this changes in the tax payment is due to the deferred tax rate that is being paid by the company and is liable to the company for the estimated years, which are 2016 and 2015 (Rohlin et al, 2014).
(iv) Comment on deferred tax assets/liabilities that is reported in the balance sheet articulating the possible reasons why they have been recorded.
It has been noted that deferred tax assets or liabilities for the company can be defined as the tax amount that is the total payment of the tax, which exceeds the provision of the taxation that is to be paid by the company. It has been noted that the amount of deferred tax that is to be paid by the company has been accounted to an amount of $256,000 for the year 2015 and the amount fourth year was supposed to be $213,000 which is less as compared to the previous year's tax amount that is to be paid. This indicates that the provision tax of the company is not as much as it was supposed to be. This also shows that the tax that is to be paid will suppress the provision amount that is to be paid by the company. Deferred tax can be stated at the provisions amount that is to be paid by a company in order to identify the reliability and evaluate the reliability of expense of the company tax. In accordance to this fact that has been, stated deferred tax is identified with the help of the liability method that is being used in order to maintain the balance sheet of the company. This defines the difference between the assets and the liabilities of the company that is being used in terms of the financial purpose or the tax payment that is to be done in accordance to the annual year estimation. It has been seen that the company believes with the fat that any changes in the accrual tax of the company makes changes in the deferred tax of the company. The company has the ability to make changes in the deferred tax asset of the company, which will be based on the accounting standards and will help the company to give value to the tax provision that is to be made by the company (Tanzi, 2014).
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