The main objective of the report is to analyse the financial statement of Altura Mining Limited that include the income statement, cash flow statement and balance sheet of the company. For the purpose of analysing last 3 years that is for the year 2015, 2016 and 2017 annual report of the company will be taken into consideration. The report will focus on the movement of cash flows over the last 3 years, items included in the comprehensive income statement of the company and tax expenses of the company (Alturamining.com, 2018).
From the annual report of Altura Mining it has been identified that the cash flow statement of the company is segregated into 3 broader headings. Those are – net cash flow or cash used in operating activities, net cash used in or provided by the investing activities and net cash provided by or used in the financing activities.
Looking into the cash flow statement of the company over the last 3 years it can be recognized that there is significant increase is the cash used in investing activities for the year 2017 as compared to the previous year. The reason of the increase was the purchase of plant, property and equipment amounting to $ 35,019,000 (Alturamining.com, 2018).
|
Particulars |
2017 ($’000) |
2016 ($’000) |
2015 ($’000) |
|
Net cash used in operating activities |
-5,557.00 |
-4,054.00 |
-2,954.00 |
|
Net cash (used in) / provided by investing activities |
-43,581.00 |
-1,714.00 |
-1,844.00 |
|
Net cash provided by (used in) financing activities |
40,309.00 |
25,817.00 |
3,574.00 |
Various items those were included in the other comprehensive income statement of the company are profit or loss of the year that amounted to loss of $ 61,65,000, items that can be reclassified under profit and loss statement that includes changes in the fair values of the financial assets those are available for the purpose of sale that amounted to -$ 509,000 and the amount of exchange difference on account of translation from the foreign controlled companies amounted to $ 14,38,000. Further another item included in the comprehensive income statement of the year was the amount of other comprehensive income amounted to $ 14,38,000. After adjusting all these items total amount of comprehensive loss for the year 2017 amounted to $ 52,36,000 (Waddock, 2017).
Items those are recognised as revenue are the items from which the company can earn any amount as income. The revenues are recorded by the company on accrual basis and like the cash receipts those are recorded on receipt basis. The other expenses those are recognized by the company under the comprehensive income statement are the cost expensed by the company for the operations of the company (Pavlovi? & Bogdanovi?, 2013).
Exchange difference states the amount arises from the translation of the foreign operations that are directly transferred to foreign currency translation reserve of the company as the separate component under equity. The amounts of differences are recorded in comprehensive income statement only after disposal of foreign operation (Reid & Myddelton, 2017).
The financial assets those are available for sales are the financial assets that includes listed equity securities those are marketable, non-derivative securities those are either not classified under any category or those are designated under the category of financial assets those are available for sales. It further includes the non-current assets except where the management pretends to sale the investment within 1 year period from the close of the reporting period. The investment are categorized as available for sale if the securities do not have fixed period for maturity and determinable or fixed payments and the managements are likely to hold the assets for medium term to long term period.
Other comprehensive income of the company are those expenses, incomes, losses or income as per IFRS (international financial reporting standard) as well as GAAP (generally accepted accounting principles) those are not included under the net income recorded in the income statement. It provides the reader with more clear and transparent view of the company’s financial statement. It states that the items are listed after the net income of the income statement. Revenues, gains, losses and expenses those are recognized under other comprehensive income statement when they have not been recognized yet. The items recorded in the income statement when the required transactions are completed, for instance the investment has been sold. Therefore, if the entity has made any investment in any bond and the value for that bond changes, the difference is recognized in other comprehensive income statement. Once those bonds are sold the realizable loss or gains are shifted from the other comprehensive income statement and are recorded under the income statement or profit and loss statement. Items those are generally recognized under the other comprehensive statement are –
The charges against the currents income tax expenses of the company are based on result of the year after adjusting the disallowed or non-assessable items. It is computed through using the rate of tax that has been substantially enacted or enacted on the balance date for each of the jurisdiction. The amount is adjusted for the changes in the deferred tax liabilities and assets those are attributable for temporary differences and for the losses generated from unused tax. The income tax expenses of the company for the year 2015 was $ 320,000 and for the year 2016 it was $ 778,000. However for the year 2017 the amount of income tax benefit of the company was $ 534,000.
The applicable tax rate of the company for the year ended 2016 was 30% and for 2017 was 27.5%. The losses of the company for those years were $ 30,603,000 and $ 6,449,000 respectively for 2016 and 2017. However, the income tax expenses of the company for the year 2016 amounted to $ 778,000 and income tax benefit for the year 2017 amounted to $ 534,000 does not match with the income tax rate. The tax expenses of the company as charged in the income statement does not match with the applicable tax rate as there are adjustments for various items like share compensation costs, non-deductible expenses, over or under provision in previous year, difference in the tax rates of overseas and effect of the de-recognition of current year tax losses.
Deferred tax is recognized through balance sheet liability method with regard to the temporary difference on account of tax bases for the liabilities and assets and the carrying amounts under the financial statements. The deferred tax is computed at the substantially enacted or enacted rate of tax by the closing of reporting period and is likely to be applied for the period under which the liability is settled or the assets is recognised (Laux, 2013). Deferred tax is realised for the amount which is apparent that the future profits on account of tax will be available for which the unused losses from tax and deductible temporary differences can be utilised. Deferred tax liabilities and assets are offset while legally enforceable right is there to offset the current tax liabilities and assets and while the balances from the deferred tax accounts are related to same authority for taxation (Warren & Jones, 2018). Deferred tax assets of the company for the year ended 2016 was amounted to $ 524,000. However, the company did not identify any amount under deferred tax for the year ended 2017.
There is no amount recorded by the company as current tax. However, the prepaid current tax recorded in the balance sheet of the company amounted to $ 248,000 for the year 2016 and $ 272,000 for the year ended 2017. There is difference between income tax payable and the expenses of income tax as the income tax payable is the amount that is associated with taxable profit or taxable loss of the accounting year. The amount of income tax payable is calculated by the applicable substantially enacted or enacted tax rates on the date of reporting. The amount of current tax is recorded as expenses or income under the income statement of the company (Narotzki, 2017). On the other hand, the amount of income tax expenses is the amount the company owes as per the accounting rule with regard to standard business. The income tax payable is the amount company owes based on the tax codes. Income tax payable amount is recorded in the income statement as an expense (Melloni & Stacchezzini, 2018). Due to these differences there are differences in income tax expenses of the company and income tax payable by the company.
The income tax expenses of the company for the year 2016 amounted to $ 778,000 and income tax benefit for the year 2017 amounted to $ 534,000. However, the income tax paid as per the cash flow statement for the year 2016 amounted to -$ 75,000 and for the year 2017 amounted to $ 320,000 (Marshall, 2016). The reason for variance is that the amount of tax expenses recorded as income tax payable includes different expenses like selling expenses, administrative expenses, operating expenses, financing expenses and other expenses, if any. On the contrary, the income tax recorded by the company in the cash flow statement is the charges of tax on the operating activities of the entity (Maaloul & Zéghal, 2015).
New insights – from the income tax treatment of Altura Mining Limited various new insights gained are that the company disclose the revenues at top of income statement. Then the expenses are charged against the income of the company. On taxable income of the entity the tax is deducted from that to get the income available after income tax. Another insight gained was that expenses from accrual accounting rules vary with rules applicable for filling up the tax returns.
Difficult and confusing part – the most difficult and confusing part in the annual report of the company was deferred tax. Deferred taxes are recognized for temporary differences that are under control of the company that the differences will be reversed in the future period. However, controversies are there regarding the ability of the company to reverse the difference. No specific indication is mentioned that can be considered as probable for the reversal.
It is concluded from above discussion that the company complies with all the requirement of ATO (Australian Tax Office) with regard to the tax treatment of the items included under the financial statement of the company. The company also provided proper details and justification for the treatment of tax through the notes to account. Further, the company records all the expenses, revenues in the financial statement after giving effect of GST (goods and services tax).
Reference
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