HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION HI5020 Corporate Accounting Group Assignment T1...

Question

HOLMES INSTITUTE

FACULTY OF
HIGHER EDUCATION

HI5020 Corporate Accounting Group Assignment T1 2020
Assessment Details and Submission Guidelines

Trimester T1 2020
Unit Code HI5020
Unit Title Corporate Accounting
Assessment Type Individual Assignment
Assessment Title Accounting for Income Tax
Purpose of the
assessment (with ULO
Mapping)
This assignment aims at developing a clear understanding of students on corporate
accounting for income tax issues. Students will develop an understanding on different
concepts used in accounting for income tax. They will also develop an understanding on
how different concepts of accounting for income tax are used by companies in the
practical setting.
(ULO 1, 2, 4, 5, 6).
Weight 40 % of the total assessments (Written assignment 30 % + Presentation 10 percent)
Total Marks Written assignment 30 marks + Presentation 10 marks
Word limit 3000 words ±500 words
Due Date Assignment submission: Final Submission of individual Assignment: 11:59 pm Friday,
Week 10

Late submission incurs penalties of five (5) % of the assessment value per calendar day
unless an extension and/or special consideration has been granted by the lecturer
prior to the assessment deadline.
Submission
Guidelines
 All work must be submitted on Blackboard by the due date along with a completed
Assignment Cover Page.
 The assignment must be in MS Word format, no spacing, 12-pt Arial font and 2 cm
margins on all four sides of your page with appropriate section headings and page
numbers.
 Reference sources must be cited in the text of the report, and listed appropriately
at the end in a reference list using Harvard referencing style.

Page 2 of 6
HI5020 Corporate Accounting T1 2020
Assignment Specifications

Purpose:
This assignment aims at developing a clear understanding of students on corporate accounting for income tax
issues. Students will develop an understanding on different concepts used in accounting for income taxes.
They will also develop an understanding on how different concepts of accounting for income tax are used by
companies in the practical setting.

Assessment task:
Collect the latest annual report of an ASX listed company for the last 2 financial years. Please read the financial
statements (balance sheet, income statement, cash flow statement) and notes attached to financial
statements on income tax issues very carefully. Please remember some aspects of your firm’s treatment of its
tax – can be a very complicated area, particularly for some firms. Based on your understanding of the topic
“accounting for income tax” and based on your reading of the collected annual reports, do the following tasks.

i Briefly explain the concepts of accounting profit, taxable profit, temporary difference, taxable temporary
difference, deductible temporary difference, defe
ed tax assets and defe
ed tax liability.

ii Briefly explain the recognition criteria of defe
ed tax assets and defe
ed tax liability.

iii What is your firm’s tax expense in its latest financial statements?

iv 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 highlighting the reasons for differences.

v Identify the defe
ed tax assets/liabilities that is reported in the balance sheet articulating the possible
easons why they have been recorded.

vi Is there any cu
ent tax assets or income tax payable recorded by your company? Why is the income tax
payable not the same as income tax expense?

vii Is the income tax expense shown in the income statement same as the income tax paid shown in the cash
flow statement? If not, why is the difference?

viii Briefly explain the concepts of temporary difference and permanent difference. Identify any permanent
differences that your company may have.

ix What do you find interesting, confusing, surprising or difficult to understand about the treatment of tax
in your firm’s financial statements? What new insights, if any, have you gained about how companies
account for income tax as a result of examining your firm’s tax expense in its accounts?
Assignment Structure should be as the following:
Abstract - One paragraph
List of Content
Introduction
Body of the assignment with detailed answer on each of the required tasks
Summary/Conclusion
List of references

…..
Page 3 of 6
HI5020 Corporate Accounting T1 2020
Instruction for video presentation:

Based on your written assignment you will have to make a summary video presentation ranging for 10
minutes. Your presentation should explain the assignment tasks and your key findings. You will have to upload
the presentation in You Tube and submit the You Tube link in the black board so that the marker can watch
and mark your presentation. Your assignment will be marked based on the following criteria:

Presentation Style (3
marks)
Content (4 marks) Clarity of the presentation
((3 marks)
Excellent XXXXXXXXXX
Very good XXXXXXXXXX1.75
Good XXXXXXXXXX.75-1.5
Satisfactory XXXXXXXXXX XXXXXXXXXX
Unsatisfactory XXXXXXXXXX0
Marking criteria
Marking criteria Weighting
Abstract 1%
List of content & overall presentation of the assignment 1%
Introduction 1%
Briefly explain the concepts of accounting profit, taxable profit, temporary difference,
taxable temporary difference, deductible temporary difference, defe
ed tax assets and
defe
ed tax liability. Provide suitable example for each concept.
7%
Briefly explain the recognition criteria of defe
ed tax assets and defe
ed tax liability. 2%
What is your firm’s tax expense in its latest financial statements? 1%
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 highlighting the reasons for
differences.
3%
Identify the defe
ed tax assets/liabilities that is reported in the balance sheet
articulating the possible reasons why they have been recorded.
3%
Is there any cu
ent tax assets or income tax payable recorded by your company? Why is
the income tax payable not the same as income tax expense?
3%
Is the income tax expense shown in the income statement same as the income tax paid
shown in the cash flow statement? If not why is the difference?
3%
Briefly explain the concepts of temporary difference and permanent difference. Identify
any permanent differences that your company may have.
2%
What do you find interesting, confusing, surprising or difficult to understand about the
treatment of tax in your firm’s financial statements? What new insights, if any, have you
gained about how companies account for income tax as a result of examining your firm’s
tax expense in its accounts?
2%
Conclusion 1%
Total in Written Assignment 30%
Video presentation 10%
Total 40 %

Page 4 of 6
HI5020 Corporate Accounting T1 2020
Marking Ru
ic
Excellent Very Good Good Satisfactory Unsatisfactory
Briefly explain the
concepts of
accounting profit,
taxable profit,
temporary
difference, taxable
temporary
difference,
deductible
temporary
difference, defe
ed
tax assets and
defe
ed tax
liability.
/7
All seven
concepts have
een discussed
clearly and
comprehensively
. Suitable
examples have
een given
All seven
concepts have
een discussed.
Suitable examples
have been given.
Has discussed
all seven
concepts with
examples.
Minor e
ors
emain.
Attempted to
discuss all
seven
concepts. Also
attempted to
provide
examples.
Major e
ors
emain.
Did not show
an
understanding
of the
concepts, did
not provide
appropriate
examples.

Briefly explain the
ecognition criteria
of defe
ed tax
assets and defe
ed
tax liability.
/2
The recognition
criteria of
defe
ed tax
assets and
defe
ed tax
liability have
een co
ectly
and
comprehensively
discussed
The recognition
criteria of
defe
ed tax
assets and
defe
ed tax
liability have
een discussed.
There is scope for
improvement.
The
ecognition
criteria of
defe
ed tax
assets and
defe
ed tax
liabilities have
een
discussed with
minor e
ors
and ambiguity.
The
ecognition
criteria of
defe
ed tax
assets and
defe
ed tax
liabilities have
een
discussed with
major e
ors
and ambiguity.
An attempt
has been
made to
discuss the
ecognition
criteria of
defe
ed tax
assets and
defe
ed tax
liability but
the answer is
mostly
i
elevant, or
an attempt
has not been
made to
discuss the
ecognition
criteria of
defe
ed tax
assets.
What is your firm’s
tax expense in its
latest financial
statements?
/1
The income tax
expense has
een co
ectly
identified
XXXXXXXXXXThe income
tax expense
has been
inco
ectly
identified
The income
tax expense
has not been
identified.
Page 5 of 6
HI5020 Corporate Accounting T1 2020
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
highlighting the
easons for
differences.
3
Demonstrated an
excellent
understanding of
the issue. The
easons for the
differences have
een identified
and explained
Demonstrated a
good
understanding of
the issue. The
easons for the
differences have
een identified
and explained
Demonstrated
a poor
understanding
of the issue.
The reasons
for the
differences
have been
identified and
explained with
minor e
ors
Demonstrated
a poor
understanding
of the issue.
The reasons
for the
differences
have been
identified and
explained with
major e
ors
Demonstrated
very poor or
no
understanding
of the

hi5020-assignment-t1-2020-nbwoymmp.pdf

Harshit · Accepted Answer

CORPORATE ACCOUNTING
ABSTRACT
This assignment focuses its objective on the proper understanding of the treatment of the tax in the books of accounts(BOA). The controversy of the treatment exists due to the presence of two different laws that is the corporations act used in the calculation of book profit and the income tax(IT) laws used in the preparation of the taxable earning. As two amounts are created and when the tax is calculated on both the amounts, it is different. The adjustment and the treatment of the same in the books is the main objective of this assignment. It also covers the conceptual explanation of the various terms that are used in the annual report and the same has also been explained. The comparison of the tax amounts that have been mentioned in the annual report are different the reasons for such difference has been covered.
The company for which the above-mentioned assignment has been done is Brambles Limited which is an ASX listed company. 
	Serial Number
	Contents
	Page Number
	1.
	Introduction
	1
	2.
	Concepts
	2-3
	3.
	Recognition Criteria
	4
	4.
	Amount of tax expense
	5
	5.
	Comparison of Accounting Income and Taxable Income
	6
	6.
	Reporting of Deferred Tax Assets and Liabilities
	7
	7.
	Comparison Between Income Tax Payable and Income Tax Expenses
	8
	8.
	Income Tax Expense VS Income Tax Paid
	9
	9.
	Temporary Difference and Permanent Difference
	10
	10.
	Insights
	11
	11.
	Conclusion
	12
	12.
	References
	13
INTRODUCTION
Brambles Ltd was established in the year 1875 which is in the business of unit-load machines, crates, and containers. When it was founded, it was in the business of logistics but later it diversified in many other verticals of business such as pooling solutions and is now one of the top companies in the world in this industry. The company operates in more than 60 countries and employs more than 11,000 people globally. It has more than 750 service centers and owns more than 330 million pallets, containers, etc. The company had sales revenue of US $ 4595.3 million in the year 2019 when the underlying profit was US $ 803.7 million. The company generated a cash flow of US $ 431.8 million with 19.5% of ROCE(Return on capital employed). 
CONCEPTS RELATED TO ACCOUNTS
ACCOUNTING PROFIT: The term accounting profit refers to the profit that is earned by an entity in a particular period of reporting and recorded in the financial statements of the company. This profit is calculated by using the accounting policies and different accounting frameworks. The accounting profit under the different frameworks may be different for a particular entity. The IFRS and US GAAP are the most popular accounting standards that are used to prepare a financial statement and calculate accounting profit (Badenhorst, W.M., and Ferreira, P.H., 2016). The various purposes for which accounting profit is used are for tax purposes, stock exchange requirements, annual board meetings, etc.
In the case of Brambles Limited, the accounting income that is the earnings before tax(EBT) for the year ended 30th June, 2019 is US $652.4.
In the case of Brambles Limited, the accounting income that is the earnings before tax(EBT) for the year ended 30th June, 2018 is US $675.3. 
TAXABLE PROFIT: The term taxable income refers to profit on which income tax is calculated and which is required to be paid to the government. This profit is usually different from accounting profit and generally not shown in the financial statements. Taxable profit includes both earned and unearned income. The difference in both the profits may be for various reasons like the difference in depreciation rate for an asset in the books and as per income tax etc. various deductions under the Income Tax Act.
TEMPORARY DIFFERENCE: Temporary differences (also known as timing difference) refer to those differences which occur as a result of the difference in accounting as per the Company's Act (accounting profit) and Income Tax Act (taxable profit) which are eliminated or reversed shortly. The only consideration here is that it is recognized at different periods and this leads to the creation of Deferred Tax Assets and Deferred Tax Liabilities. One such example of the temporary difference is the different rate of depreciation under the Income Tax and Company Act for a given asset.
TAXABLE TEMPORARY DIFFERENCE: This term refers to the temporary difference which causes the taxable income for a given period to be lower than the accounting income. As a result, income tax payable in the current period is lower than the income tax expense on accounting profits. The difference between the income tax payable and income tax expenses as calculated on accounting profits gives rise to Deferred Tax Liabilities (Frey, L. and Engelhard, L., 2017). An example is the depreciation rate which is high in income tax and lower in books resulting in lower income tax in the current year.
DEDUCTIBLE TEMPORARY DIFFERENCE: This term refers to the temporary difference which causes the taxable income for a given period to be higher than the accounting income. As a result, income tax payable in the current period is higher than the income tax expense on accounting profits. The difference between the income tax payable and income tax expenses as calculated on accounting profits gives rise to Deferred Tax Assets (Yasseen, Y., Jansen, J. and Small, R., 2016). An example is the rent received in advance for which income tax in the current year will be higher.
DEFERRED TAX ASSET: These are items shown in the Balance Sheet of a company that helps in the reduction of income tax payable based on taxable profits. The reason for its occurrence is that higher income tax is paid on certain items and hence shown in the Financial Statement as an Asset. The carryforward of tax losses and difference rules as per tax and accounting are also the reasons of the Deferred Tax Asset (Laux, R.C., 2013).
The balance sheet(BS) of Brambles Limited as on 30th of June 2019 reported a total deferred tax asset (DTA) amounting to US $73.6 million which was at US $38.

HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION HI5020 Corporate Accounting Group Assignment T1 2020 Assessment Details and Submission Guidelines Trimester T1 2020 Unit Code HI5020 Unit Title Corporate...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment