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Requirement
1- Write a report on corporate accounting in 1500 words with reference to APA.
Solution
Introduction:
In the present report, an effort has been made to ensure a proper analysis of the cash flow statement of the company. Other comprehensive income statement of the company and the details regarding the tax expenditure of the company is done. Aeon Metals Ltd. is the company that has been selected for the purpose. It is a company that is publicly listed on the Australian Stock Exchange and is engaged in mineral exploration. The company has its headquarters in New South Wales, Australia.
1. Cash flow statement of the company:
1) The constituents of the cash flow statement of the company that has been presented in the financial statements of the company are as follows:
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a) Government grant received by the company: The item represents the amount that the company has received in respect of the government grant given to various companies. The grants are being given to various companies across several industries by the government to boost the business within the country. The grant received from the government is utilised by the entities for the purpose of acquisition of the necessary assets that are going to be utilised for the generation of revenue or carrying out business activities by the entity. The amount of the grant received by the entity amounted to $443000, $466000 and nil for the year 2015, 2016 and 2017 respectively. It can be seen that the grant that is to be received by the company is dependent on several factors and is not constant for every years. It depends on the policy that has been adopted by the government in this respect and the eligibility of the company to avail the same.
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b) Cash paid to the suppliers and the employees of the company: This item represents the amount that the company pays to the employees and the suppliers of the company in respect of the remuneration that is due to the employees of the firm and the amount that is due by the company in respect of the various items that are being purchased by it from its suppliers. The amount of payments that were made by the company to the suppliers and the employees of the entity equalled $1622000, $1394000 and $1674000 for the year 2015, 2016 and 2017 respectively. It is observed that the outflow of the company has increased in this respect over the period of three years. The reason for this can be attributed to the increase in the number of employees of the company and the amount of the purchase that has been transacted by the company with its suppliers.
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c) Interest received: This item represents the amount that has been received by the company in terms of the amount that is payable by its customers to it and the various parties to which the company had provided funds to. The interest received of the company amounted to $102000, $161000 and $97000 respectively for the year 2015, 2016 and 2017. The amount of the interest received by the company has reduced over the period of three years.
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d) Acquisition of the property plant and equipment: This is the amount that is being spent by the company for the purpose of purchase of property, plant and equipment. The acquisition of these capital assets by the company is necessary for the purpose of carrying out its business activities in the future. The amount spent by the company for the acquisition of such assets amounted to $28000, $240000 respectively for the year 2015, 2016 and 2017. The expenditure has reduced over the period due to reduction in the requirement of the fixed assets of the company.
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e) Payments in respect of the exploration activities: This is the amount that is being paid by the company for the purpose of conducting exploration of the new sources of minerals for the purpose of exploration by the company. The exploration of the mineral is one of the primary and core parts of the business conducted by it. The amount that is being spent by the company on these exploration activities amounted to $4235000, $2227000 and $3204000 respectively for the year 2015, 2016 and 2017. The amount that is spends by the entity on the exploration activities are directly linked with the input that is received by the company from the team regarding the possibility of an exploration. Hence, the amount that is being spent by the company for this purpose fluctuates very much over the period of time.
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f) Proceeds received by the company from the issue of the shares of the company: This is the amount that is received by the company from the shareholders of the company who subscribe to the shares that are being issued by the company for the purpose of raising funds that are require by the company to carry out its future business operations. The amount that has been received by the company from the issue of shares amounted to $2094000, $3260000 and nil respectively for the year 2015, 2016 and 2017. The amount raised from the issue of the shares of the company fluctuates as the company issues its shares as per its requirement of the funds.
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Place Your Order2) Comparative analysis of the three broad categories of cash flow (3 years):
As per the general guidelines of the GAAP and the IFRS the cash flow statement of a company comprises of three broad categories i.e. cash flow from operating activities, cash flow from investing activities and the cash flow from financing activities.
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Operating activities: These are the activities that form the core of the business that is being carried out by the company. In the case of the company the main constituents of the operating activities of the company are the cash paid to the suppliers and the employees, the cash generated from its operations and the grant that has been received from the government. The amount of cash outflow that is generated from the operating activities amounted to $1174000, $928000 and $1674000 respectively for the year 2015, 2016 and 2017 respectively.
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Investing activities: This involves the purchase and sale of fixed assets by the company. The cash outflow that is incurred by the company in respect of the various investing activities amounted to $ 4264000, $2252000 and $3184000 respectively for the year 2105, 2016 and 2017. The amount has reduced over the period due to the reduction in the exploration expenses incurred by the company.
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Financing activities: This is the amount that is raised by the company from various sources like equity shares etc. the amount that has been raised by the company from the issue of the shares amounted to $2094000, $3260000 and nil respectively for the year 2015, 2016 and 2017. The amount hasreduced, as it is dependent on the finance requirement of the company.
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Other comprehensive income statement: The company has not reported any item in its other comprehensive income statement. The reason being the absence of any item of expense, revenue, gain or loss that has not yet been recognised by the entity. Only such item can be recognised in the other comprehensive income statement that has not yet been recognised by the company and the same is deductible from the net benefit of the company.
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3) Accounting for Corporate income tax:
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The tax expense of the Aeon metals limited is nil for the year. As the company is earning losses, it is not required to incur any tax expenses. However, the tax benefit that has accrued in respect of the company is equal to the rate of tax applicable on the company (30%) times the accounting profit or loss of the company.
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The company has not recorded any deferred tax assets or liabilities for the year 2017. The reason being that the management of the company is not sure that the future economic benefits of the deferred tax asset will accrue towards the company.
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The company has not recorded any sort of current tax assets or income tax payable in its financial statements.
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As the company is running in losses thus the company is not required to pay any sort of taxes. The company has not recorded any income tax expense in the profit and loss statement of the company and neither has it recorded any outflow in respect of the income tax expense in the cash flow statement.
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The interesting fact that has been found in this analysis is that the company has not paid the income taxes for last three years and in addition to that the fact that there is a lot of subjectivity involved in the process of judging whether the benefits that are associated with the deferred tax assets of the company are going to accrue in respect of the company or not.
Conclusion:
The conclusion that can be drawn after conducting the analysis of the financial statements of the company and the cash flow statement of the company is that, the company has not paid the income taxes for the last three years and in addition to that, the company has not recorded any item in its other comprehensive income statement. The company also has no deferred tax assets as on the year 2017.
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