Journal Of Business And European Management -Myassignmenthelp.Com

Question: Discuss About The Journal Of Business And European Management? Answer: Introduction An important assertion regarding financial report is that it provides the snapshot for the financial position for the organizations particularly the statement of financial position. Three major items form the part of the balance sheet namely the assets, liabilities and owners equity. In the present context the latest financial report of Fletcher Building Ltd is undertaken for the financial year of 2017 for conducting the analysis. Under the heads of Equity Fletcher Building Ltd has reported capital and reserve (Szbilir, Kula and Baykut 2015). During the year 2016, the amount of equity reported by the company stood 2650 while in the subsequent year of 2017 the amount of equity stood 2678. Similarly, under the heads of equity there also consisted of reserve. The reserve for Fletcher Building Ltd stood $1,041 in the year 2016 while in the following year of 2017 the Reserve stood 2,678 respectively. The primary objective of issuing equity shares by Fletcher Building Ltd was to raise the capital. The method of computing the issued capital is multiplying the total amount of the outstanding shares with the total amount of equity shares (Badenhorst, and Ferreira 2016). Fletcher Building Ltd the issued shares at the begging of the year standing 692,501,249 and under the dividend reinvestment plan the company issued 3,419,925 with total amount of share that is issued during the year stood 695,921,925. Another item under the heads of equity stands Reserve. Reserve is regarded as the amount that is paid to the shareholders beside the basic price of the shares. The total amount of reserve stated by the corporation stood $1,041 in the year 2016 while in the following year it declined to $878. This is because the variations in exchange originating from the translation of entities and other currency instrument designed in the form of hedge of investments is identified in directly to the currency translation reserve (Chytis 2015). Additionally, whenever the derivative financial instrument is designated in the form of hedge of variations in the cash flow of assets the effective portion of the gain or loss is identified directly in the cash flow hedge reserve within equity and immediate earnings. The execution of business operations requires organizations to experience different types of operating expenditure, selling and administrative expenditure and other miscellaneous expenditure. Tax expenditure is regarded as one of the essential part of the business expenditure. Tax expenditure can be defined as the expenditure or the liability that is owned to the federal, state or provincial and municipal governments (Wang, Butterfield and Campbell 2016). Tax expenditure is computed by multiplying the adequate tax rate with the business income generated prior to tax after taking into the account the factor such as the non-deductible items, tax assets and tax liabilities. As evident from the current context of the Fletcher Building Ltd tax expenses reported by the company stood for the year ended 2016 stood $131 million whereas in the subsequent year of 2017 the income tax expenditure that is reported by the company stood $57 million. It is vital for the Fletcher Building Ltd to determine the tax computations appropriately and make a payment based on the yearly basis (Lubbe, Modack and Watson 2014). In the present context, it is necessary for the company to make payment to the income tax expenditure to both the federal and statement government. Firms are required to pay tax at the rate of 30%. As evident from the latest financial report of the firm Fletcher Building Ltd stated that the tax expenditure of $57 million represents an effective tax rate of 35% that has been particularly influenced by the significant items reporting in the financial year (Jordan 2016). The income tax rate excludes the significant items with effective tax rate of 20%. As evident from the annual report of Fletcher Building Ltd the organizations profit before tax during the year 2016 stood $719 million while in the subsequent year of 2017 the earnings before tax for Fletcher Building Ltd stood $273 million (White 2014). The income tax rate for the corporation stood 35% for the year 2017. In the income statement of the Fletcher Building Ltd the actual tax rate for the business stood 35% while in the subsequent year of 2016 the company reported an effective tax rate of 22%. This represents a differences in the tax expenditure for Fletcher Building Ltd. As evident from the tax differences the reconciliation of the income tax expenditure represents numerous factors that contribute to such differences in the income tax expenditure (Bradbury and Mear 2017). The primary factor that resulted in differences between the Australian and international tax rate is the differences in the tax rate. The overseas tax rate is lower than the Australian tax rate. Another factor that is accountable for the variations in the tax rate is the non-deductible amount of depreciation and the amortization. As evident from the financial report of the organization is the depreciation and the amortization from the expenditure of tax is deducted along with the interest paid. Because of this $99 million of cash tax paid is deducted from the depreciation and amortization expenditure (Zhou 2016). This expenditure represents the deductible items from the profit of the organization. Additionally, from the operating earnings before significant items is deducted from the tax expenditure. Deferred tax liability and the deferred tax asset are viewed as the most important element the statement of financial position. A deferred tax liability can be regarded as the account of an organization balance sheet that result in provisional differences amid the organization bookkeeping and tax carrying values (Reid and Myddelton 2017). The deferred tax liability represents the anticipated and enacted income tax rate along with the projected amount of tax that is payable for the present year. Deferred tax asset on the other hand represents an accounting term where the company has paid in excess the taxes or it has paid the levies in advance on its balance sheet. These deferred tax asset amount are eventually returned to the business as the tax relief with the amount that is overpaid stands as the asset for the organization (Jaya 2016). As evident from the current financial report of the Fletcher Building Ltd the deferred tax asset reported by the company for the financial year 2016 stood $24 million while in the subsequent year of 2017 the deferred tax asset stood $52 million. The deferred tax asset has increased in the subsequent year of 2017, this is because the tax losses for which the no deferred tax asset was recognized. On the other hand, the deferred tax liabilities for the firm stood $58 million while in the subsequent year of 2017 the deferred tax liabilities stood $47 million (Kirchler and Hoelzl 2017). The fall in the deferred tax liability represents $69 milli on relating to the Iplex Australia where the goodwill and the brands of the company have been impaired. Fletcher Building Ltd Has Offset the impairment of the brands with the reversal of $11 million that was related to the deferred tax liability through the tax expenditure. Deferred tax is identified based on the provisional differences among the carrying value of the assets and the liabilities (Saad 2014). The taxable value apart from the circumstances when the deferred tax liability originates from the early identification of the goodwill or the asset and liability in the transaction, which is not the trade combination. Similarly, the deferred tax assets and deferred tax liability neither creates an impact on the accounting profit nor it creates an impact on the profit and loss. During the procedure of tax treatment current tax assets, current tax liabilities and income tax payable are regarded as the important factors. During the year 2016 Fletcher Building Ltd reported a current tax asset of $2 million while in the subsequent year of 2017 the current tax assets stood $15 million (Piketty 2015). As evident from the annual report of Fletcher Building Ltd the provision for current tax represents the anticipated amount because of the payment made by the group during the 12 months period. The current tax liabilities on the other hand stood $26 million during the year 2016 while in the subsequent year of 2017 the current tax liabilities stood $30 million. As evident from the annual report it is evident that there prevails a differences in the income tax expenditure and income tax payable. Consequently, from the tax figures reported by the company the current tax liabilities represents the income tax that is payable for the income year and the same is payable in regard to the earlier year (Khan and Gedamkar 2015). Accordingly, the situation is entirely different in respect of the income tax expenditure. The income tax expenditure is regarded as the liability for Fletcher Building Ltd since the amount of tax is computed on the present year revenue generated by the firm. Therefore, this result in high differences amid the concepts of income tax payable and the income tax expenditure. Organizations generally provide information relating to the income tax expenditure in the statement of income along with the statement of cash flows. In agreement with the income tax expenditure Fletcher Building Ltd reported a differences in income tax expenditure and income tax paid. The statement of cash flow provides that the company paid the income tax amount of $99 however the tax expenditure reported by Fletcher Building Ltd for the year 2017 stood 57 million. Evidently it is found that the figures of tax are different amount of tax in both the statement of cash flow and income statement. The operating income before the significant items stood $525 million the amount of tax paid standing $99 million (Fletcherbuilding.com 2018). The income tax payable falls under the heads of current tax liabilities. Because of this, Fletcher Building Ltd reported the payment of the income tax payable in the cash flow statement and this primarily contributed to the differences in the statement of cash flow. Along with this, there are different forms of deductible and non-deductible items, which cannot be included in the cash flow statement since the reconciliation of the items is conducted in the later stages. Because of this, the amount of income tax paid provided in the statement of the cash flow represents is less in comparison to the tax expense reported in the income statement. Hence, the above stated reasons are accountable for creating the differences among the income tax reported in the cash flow and income statement. As evident from the analysis of the financial report of the Fletcher Building Ltd an important consideration can be paid regarding the treatment of the tax expenditure and tax paid. As evident from the analysis, it can be stated that the Fletcher Building Ltd has interestingly computed the tax expenditure. In agreement with the reconciliation, relating to tax the company has taken into the considerations the necessary factors that has contributed to the differences in the tax reconciliation. Interestingly considering the differences of the income tax relating to current and deferred tax. The annual report provides that the business project the provision of the current tax with the amount that is due for the payment during the next fiscal year. Interestingly the provision for the deferred tax is computed by using the balance sheet liability technique. Furthermore, the deferred tax is identified based on the temperance variances reported by the company on the carrying amount of the assets and liabilities along with the assessable value. It is understood that the deferred tax is not identified based on the temporary differences and tax losses unless the recovery becomes probable. Further the learnings from the annual report provides that there is no significant amount of deferred tax liabilities is recorded relating to the undistributed amount of profits of the subsidiaries and associates. Apart from these learnings can be gained relating to the fact of the differences in the treatment of tax for every nation. Reference List: Badenhorst, W.M. and Ferreira, P.H., 2016. The Financial Crisis and the Value?relevance of Recognised Deferred Tax Assets.Australian Accounting Review,26(3), pp.291-300. Bradbury, M.E. and Mear, K.M., 2017. Interpreting the Impact of IFRS Adoption.Australian Accounting Review,27(2), pp.214-219. Chytis, E., 2015, February. Deferred Tax Assets from unused Tax Losses under the prism of Financial Crisis. InInternational Conference on Business Economics of the Hellenic Open University, Athens. 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About capital in the twenty-first century.American Economic Review,105(5), pp.48-53. Reid, W. and Myddelton, D.R., 2017.The meaning of company accounts. Routledge. Saad, N., 2014. Tax knowledge, tax complexity and tax compliance: Taxpayers view.Procedia-Social and Behavioral Sciences,109, pp.1069-1075. Szbilir, H., Kula, V. and Baykut, L.E., 2015. A Research on Deferred Taxes: A Case Study of BIST Listed Banks in Turkey.European Journal of Business and Management,7(2), pp.1-10. Wang, Y., Butterfield, S. and Campbell, M., 2016. Deferred tax items as earnings management indicators.International Management Review,12(2), p.37. White, S.D., 2014. Deferred Tax Assets and Credit Risk. Zhou, M., 2016. Does accounting for uncertain tax benefits provide information about the relation between book-tax differences and earnings persistence?.Review of Accounting and Finance,15(1), pp.65