The report has been prepared to evaluate the tax amount, deferred tax amount, financial statement, tax provisions and various other tax activities and the figures of an Australian company, Myer limited. The economy and the industry of Australian market has changed a lot and it explains that with the changes, it becomes important for an auditor as well as an accountant to measure the changes and apply it while preparing and auditing the annual report of the company.
Myer limited is a departmental store company in Australian market; the company offers the services and the products through its 60 stores all over the Australia. The company has launched 11 categories of clothes for woman, man and child. It has also diversified into toiletry produces (Reuters, 2018). The company’s annual report (2017) explains that the performance of the company has been altered due to changes into the industry and the economical changes in the company.
Analysis over the cash flow statement is a crucial process as it evaluates all the factors of the company related to the cash outflow and cash inflow of the company and it measures that whether the recordings of all the cash activities of the company have been done by the company in better way or not. Operating cash flows, investing cash flows and operating cash flows of the company are main segment which explains about the different cash outflows and inflows of the company (McKee, 2005).
The operating cash flows, investing cash flows and operating cash flows of the company are evaluated to recognize the changes which have occurred. The cash flow statement explains that the investments and the purchase of new assets for the business and the operations of the company have reduced the cash flow of the company. The statement explains that the other investing expenses have also been increased and it has affected the total investing cash flow of the company a huge level.
Further, the company has not repaid to the debt holders more in the year of 2017 which has lead to the project to the company to the lower cash outflow. Though, the dividend amount has been higher by the company to manage the better position in the market (Nobes, Parker and Parker, 2008).
The net cash flow of the company explains that the actual cash inflow of the company has been lower from last year. The company has followed the AASB rules to prepare the cash flow statement of the company.
|
CASH FLOW |
||
|
(Amount in $ million) |
2016-07 |
2017-07 |
|
Investments in property, plant, and equipment |
-40 |
-88 |
|
Purchases of intangibles |
-12 |
-24 |
|
Other investing charges |
3 |
17 |
|
Long-term debt issued |
||
|
Long-term debt repayment |
-295 |
-5 |
|
Cash dividends paid |
-16 |
-49 |
|
Net change in cash |
-158 |
-164 |
The comparative analysis study on the cash flow statement explains that the cash inflow position of the company is rapidly decreasing. The company has recorded and managed the cash flow position in such a way that the better idea about the cash position of the company has been identified.
The investing activities of the cash flow explain that the cash flow of the company has been lowered from the last 2 years. The current position explains that the company is required to make the policies again to manage the liquidity position of the company (Lamb, 2005).
Further, the financing activities of the company explains that the company has reduced the debt repayment level so the cash outflow of the company has been lowered and it explains that the net cash flow position of the company has also been lowered.
|
Statement of CASH FLOW |
|||
|
(Amount in $ million) |
2015-07 |
2016-07 |
2017-07 |
|
Cash Flows From Operating Activities |
|||
|
Net cash used for investing activities |
-62 |
-58 |
-109 |
|
Net cash provided by (used for) financing activities |
-55 |
-99 |
-54 |
|
Net change in cash |
-117 |
-158 |
-164 |
|
Free cash flow |
16 |
97 |
37 |
The comparative study explains that the cash flow position of the company has been lowered from the last year.
Comprehensive income statement of Myer Limited explains about those items which might to be reclassified in the profit and loss of the company. The main items of comprehensive income statement of the company are exchange rate differences and cash flows hedges.
The below image explains that the comprehensive income f the company is $ 876,000 in 2017 which has been higher from $ – 14,707,000. This explains that the current changes in the financial performance of the company are positive and due to it, the total comprehensive income of the company has been higher from $ 11,939,000 to $ 12,815,000 (Waegenaere and Sansing, 2008).
The image in question number 3 explains that mainly 2 items have been added by the company in the comprehensive income statement which are cash flow hedges and the exchange rate differences. Cash flow hedges and exchange rate explains about those incomes of the company which has been raised through foreign investment by the company. It just explains about the fluctuations in the current and the exchange rate of the company (Yahoo finance, 2018).
These items express about the changes in the business at a particular day whereas the income statement of the company measures the performance of the business as a particular day.
The annual report (2017) of Myer limited explains that the company has presented 2 different statements named by income statement and other comprehensive income statement to measure and show the actual profit of the company. The items of comprehensive income statement are not included in the income statement of the company because of FASB rules.
The items of comprehensive income statement changes rapidly in the businesses and due to their no direct connection with the daily operations, current activities and the business of the company, it is not shown in the income statement of the company. The different statement explains about the clear view of the business and a better performance of the company.
The total tax expenses of the company in 2017 are $ 18,274. Further, the image explains that the tax expanses of the company in 2016 were $ 20,152. The tax amount of Myer limited has been lowered by $ 1908. The income statement of the company explains that the main reasons behind lower income tax amount in the current year are lower sales revenue of the company.
Changes into the total revenue of the company directly affect the tax amount of the company. The tax amount is calculated on the basis of the total revenue of the company. It measures that if the sales amount would be lower than automatically the tax amount of the company would be lower (Floropoulos et al, 2010).
The tax definition explains that the tax amount is calculated on the basis of the total revenue of the company. A country always discovers a fixed % of corporate income tax which is applied on the total earnings after tax of the company to measure the total amount of tax.
In case of Myer limited, the accenting profit of the company is $ 30,213 and the taxation percentage of Australia is 30%. It explains that the total tax amount of the company on the basis of the accounting profit should be $ 30,213 * 30% = $ 9064,000.
However, the income statement of the Myer limited explains that the total tax amount of the company in 2017 is $ 18274,000.
It briefs that the actual tax expanses of the company is quite higher than the accounting taxation amount. Annual report (2017) of Meyer limited explains that the changes in the taxation profit has taken place due to various non deductable losses, assets impairment, capital losses which has not been recognized previously and various other sundry items which has not been added into the profit and loss accounting of the company (Nielsen, Raimondos-Møller and Schjelderup, 2010).
This image briefly explains that due to above stated factors the taxation amount of the Myer limited has been improved by $ 191,000. The annual report clearly states that the taxation figure has been calculated in Myer limited on the basis of the AASB 112 rules.
Deferred tax items are presented in the balance sheet of the company which explains about the temporary differences among the actual tax amount and the estimated tax amount of the company. the below image explains that the total deferred tax assets of the company was $ 43,432,000 in 2017 which has been set off by the company and thus no balance tax amount of deferred tax assets has been left in the organization.
However, the deferred tax liabilities of the company has been studied and it has been recognized that the total changes into the deferred tax liabilities of the company were $ 128,006,000 in 2017 out of which 4 43,432 has been set off as provision amount and $ 84,574,000 amount has been left in the deferred tax assets of the company which would be shown in the balance sheet of the company.
The main reason behind the deferred tax liabilities of the company are huge difference among the PE, deferred income, bard names of the company and the sundry items. It has been recognized that the deferred liabilities or assets are quite normal in an organization
Income tax payable and income tax receivable are also recognized as current tax liabilities and current tax assets respectively. The current tax assets and current tax liabilities figure explains about those items which have been added into the balance sheet of the company due to the differences among the income tax amount and the tax paid amount.
The balance sheet express that the current tax liabilities of the company are $ 1992000. It explains that the company has not paid 1,992,000 amounts to the government, And in very next year, company has to pay the amount to reduce the liabilities of the company (Istrate, 2011).
The main reason behind occur the current tax liabilities of the company is the less taxation amount has been paid by the company from the estimated taxation amount.
Income tax paid amount in the cash flow statement explains about the $ 27,759,000. And the income tax amount in the income statement explains about $ 18,274,000. It briefs that the company has paid more than the tax amount of the company.
The main reason behind the difference is the last year tax expenses which have been paid by the company in the current year to manage the performance and the position of the company. The cash flow statement only focuses on the current yea cash flow of the company whereas the income statement explains about current year expenses liability of the company (Radebaugh, Gray and Black, 2006).
Interesting thing
the interesting thing about the study was different income tax amount in the income statement, balance sheet and cash flow statement. Theire recording and treatment notes were also interesting.
Surprising thing
The surprising thing of the study is evaluation and the differences among such income tax figures. The company has recorded all the taxation data with working notes to offers a clear view.
Difficulty
The difficult part explains that the performance and recording process of the company is quite better. It briefs about better position of the company, Myer limited.
Conclusion
To conclude, Myer limited has followed the AASB 112 rules to measure and record all the taxation figures of the company.
References
Annual report. 2017. Myer limited. [online]. Available at: https://investor.myer.com.au/FormBuilder/_Resource/_module/dGngnzELxUikQxL5gb1cgA/file/Myer_Annual_Report_2017.pdf (accessed 25/5/18).
Floropoulos, J., Spathis, C., Halvatzis, D. and Tsipouridou, M., 2010. Measuring the success of the Greek taxation information system. International Journal of Information Management, 30(1), pp.47-56.
Istrate, C., 2011. Evolutions in the Accounting–Taxation (Dis) connection in Romania, After 1990. Review of Economic & Business Studies, 4(2), pp.43-61.
Lamb, M. 2005. Taxation: An interdisciplinary approach to research. Oxford University Press on Demand.
McKEE, T.E., 2005. Earnings management: an executive perspective. South-Western Pub.
Nielsen, S.B., Raimondos-Møller, P. and Schjelderup, G., 2010. Company taxation and tax spillovers: Separate accounting versus formula apportionment. European Economic Review, 54(1), pp.121-132.
Nobes, C., Parker, R.B. and Parker, R.H., 2008. Comparative international accounting. Pearson Education.
Radebaugh, L.H., Gray, S.J. and Black, E.L., 2006. International accounting and multinational enterprises. New York, NY: John Wiley & Sons.
Reuters. 2017. Myer limited. [online]. Available at: https://www.reuters.com/finance/stocks/company-profile/MYR.AX (accessed 25/5/18).
Waegenaere, A. and Sansing, R.C., 2008. Taxation of international investment and accounting valuation. Contemporary Accounting Research, 25(4), pp.1045-1066.
Yahoo Finance. 2017. Myer limited. [online]. Available at: https://finance.yahoo.com/quote/MYR.AX/financials?p=MYR.AX (accessed 25/5/18).
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