Go to the website of company. 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 firm’s annual reports and save to your computer your firm’s latest annual report. For example, these may be dated 30 June 2015 or 31 March 2016. Do not use your firm’s interim financial statements or their concise financial statements. You are need to do the following tasks:
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 firm’s financial statements carefully and include information from these footnotes in your answer.
Within your firm’s latest annual report
- From your firm’s financial statement, list each item of equity and write your understanding of each item. Discuss any changes in each item of equity for your firm over the past year articulating the reasons for the change.
- What is your firm’s tax expense in its latest financial statements?
- 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.
- Comment on deferred tax assets/liabilities that is reported in the balance sheet articulating the possible reasons why they have been recorded.
- Is there any current tax assets or income tax payable recorded by your company? Why is the income tax payable not the same as income tax expense?
- 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?
- 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?
Assessment marks as per below.
- Submitted correct annual report for your company
- Insightful description of each item of your firm’s equity – indicating a degree of understanding of what each item is
- Insightful explanation of changes in each item
- Clear description of your firm’s income tax expense
- Insightful explanation of whether, and if so why, your firms’ income tax expense differs from the corporate tax rate times the accounting income
- Explanation of why the income tax expense shown in the income statement is different from income tax shown in the cash flow statement.
- Understanding of deferred tax assets and deferred tax liabilities and why they have changed over the previous year.