Corporate Accounting
Assessment
item 2 — Assignment
Instructions:
1. This assignment needs to be
submitted using safe-assign. No hardcopy or email attachment will be accepted.
2. It is the responsibility of the
student who is submitting the work, to ensure that the work is her/his own
work. Plagiarism will be heavily penalised
3. Assignment should be of 3,000 words.
Please use “word count” and include in report.
Format
of the Report
Your submitted assignment at least should have the following
details:
a. Assignment Cover page clearly
stating your name and student number
b.
Executive summary
c.
A table of content
d. A brief introduction of the
companies you had chosen and an overview of what you discussed in this
assignment
e.
Body of the report where you write
your answers with appropriate section headings
f.
Conclusion (No recommendation is
necessary).
g. List of references. (Inclusion of
any references in this list without in-text referencing will be a futile
exercise.)
Select two public limited companies
listed on the Australian Securities Exchange (ASX) that are in the same
industry. Go to the website of your selected companies. Then go to the Investor
Relations section of the website. This section may be called, “Investors”, “Shareholder
Information” or similar name.
In this section, go to your
companies’ annual reports and save to your computer your firms’ latest annual
reports consecutively for last three years. Do not use your companies’ interim
financial statements or their concise financial statements. Please read the
financial statements (balance sheet, income statement, statement of changes in
owner’s equity, cash flow statement) very carefully. Also please read the relevant
footnotes of your companies’ financial statements carefully and include
information from these footnotes in your answer.
You need to do the following tasks:
OWNERS
EQUITY (5 Marks)
(i) From
your companies’ financial statements, list each item of equity and write your
understanding of each item. Discuss any changes in each item of equity for your
firms over the past year articulating the reasons for the change.
(ii) Provide
a comparative analysis of the debt and equity position of the two firms that
you have selected.
CASH
FLOWS STATEMENT (5 Marks)
(iii) From
the financial statement of your chosen companies, list each item reported in
the cash flows statement and write your understanding of each item. Discuss any
changes in each item of cash flows statement for your companies over the past
years articulating the reasons for the change.
(iv) Provide
a comparative analysis of your companies’ three broad categories of cash flows
(operating activities, investing activities, financing activities) and make a
comparative evaluation for three years.
(v) Also
provide a comparative analysis of the two companies that you have selected
explaining the insights that you can get from the comparative analysis.
OTHER
COMPREHENSIVE INCOME STATEMENT (5 Marks)
(vi) What
items have been reported in the other comprehensive income statement for each
company?
(vii) Why have these items not been
reported in Income Statement/Profit and Loss Statements?
(viii) Provide a comparative analysis of
the items shown in the other comprehensive income statement section for the two
companies. If these items were included in the income statement / profit and
loss statements of each company, how would the profit attributable to
shareholders of the company be affected?
(ix) Should
other comprehensive income be included in evaluating the performance of
managers of the company?
ACCOUNTING
FOR CROPORATE INCOME TAX (15 Marks)
(x) What
are the tax expenses shown in the latest financial statements of the two
companies that you have selected?
(xi) Calculate
the effective tax rate for both companies that you have selected. Effective tax
rate is calculated as (income tax expense / earnings before tax). Which one of
the companies has the higher effective tax rate?
(xii) Comment on deferred tax
assets/liabilities that is reported in the balance sheet articulating the
possible reasons why they have been recorded.
(xiii) Was there any increase or decrease
in the deferred tax assets or in the deferred tax liability reported by each of
your selected companies?
(xiv) Please calculate the cash tax amount
for both companies using the book tax amount, changes in the deferred tax
assets and deferred tax liability (please do your own research for your better
understanding of these concepts and the method of calculating the cash tax
amount the book tax amount.)
(xv) Calculate the cash tax rate for both
companies. Which company has higher cash tax rate? (Please do your own research
to familiarise yourself with how to calculate cash tax rate).
(xvi)
Why is the cash tax rate different
from the book tax rate?
Please remember some aspects of your
companies’ treatment of tax can be a very complicated area, particularly for
some companies. For a better understanding of the concepts included in the
assignment that has not been introduced in the class, please do your own
research.
PRESENTATION
You might have to do a presentation
in the class where your lecturer will question you from different angles of the
assignment and you will have to satisfy the lecturer that you were sufficiently
and appropriately involved in preparing the assignment. The presentation will
take place in the last hour of the classes of week 11 and week 12. It is the
discretion of the lecturer either to ask any student to do the presentation or
to award marks to a student without asking to do the presentation. However, every
student needs to be prepared for the presentation and well conversant about
everything that has been written in the submitted assignment.
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