Aff2491 Company Reporting

statements are for the fiscal year ended February 3, 2013.) The problem contains three major

1. The first step to evaluating the cash flows is to conduct the depreciation tax flow analysis. Depreciation is not a cash flow, but the depreciation expense lows the taxes payable for the company. As a result, the tax effect of deprecation needs to be calculated as a cash flow. There are two depreciable items on the company's balance sheet the building and the equipment. The equipment is known to have a seven year depreciable life, which will be assumed to be straight line. The building is also assumed to be subject to straight line depreciation, this time of forty years. The tax saving reflects the depreciation expense multiplied by the tax rate, which in this case is assumed to be 28%. The following table illustrates the tax effect in future dollars of the depreciation expense:

According to AASB 112, main principal of tax effect is to recognize deferred tax asset or deferred tax liability if it is probable that future recovery or settlement of asset or liability makes future tax payments larger or smaller. Requirements are to separately disclose main parts of tax expense, aggregate current and deferred tax relating to items recognized directly in equity, information demonstrating a relationship between tax expense & company’s accounting profit, and certain information relevant to temporary differences and deferred tax assets.

to FAC to cover 75% of operating costs and 90% of the capital costs for any projects

The $1,000 prepaid rent is taxed in the year of receipt. The Bluejay Apartments should use the first option. By doing so, it maximizes deferrals without affecting the cash flows

2) In 2013, Firm A paid $50,000 cash to purchase a tangible business asset. In 2013 and 2014, it deducted $3,140 and $7,200 depreciation with respect to the asset. Firm A’s marginal tax rate in both years was 35 percent. Compute Firm A’s adjusted basis in the asset at the end of each year. (part b)

(1) The payment is equal to 5% of gross rental income earned by the partnership, which is earned regardless of the overall net income of the partnership for the year.

1. Create and interpret Commonwealth’s statement of cash flows for 2013. What information does it provide regarding the HMO’s sources and uses of cash over the past year?

After careful study of this chapter, you will be able to: 1. 2. 3. 4. 5. 6. 7. 8. 9. Understand permanent and temporary differences. Explain the conceptual issues regarding interperiod tax allocation. Record and report deferred tax liabilities. Record and report deferred tax assets. Explain an operating loss carryback and carryforward. Account for an operating loss carryback. Account for an operating loss carryforward. Apply intraperiod tax allocation. Classify deferred tax liabilities and assets.

Submit via the coursework at Room No. 20 Administration Building Section A - To be completed by the student – PLEASE PRINT CLEARLY

(i) Complete the Imputation Credit Account entries for the above data, using the following format:

Detailed course programme Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 and 7 Framework, Accounts preparation and Non Current Assets Group accounts Inventories, Leases, Provisions, Substance over form Cashflows and Ratios Financial Instruments, Pensions, Deferred tax and Share based payment DipIFR

books and depreciated, and the lessee recognizes lease payments in the income statement in the period in which it is paid.

Paper F6 (IRL) Syllabus additions and deletions to better underpin the syllabus of Paper P6. This will include areas such as domicile, termination payments, and overseas aspects of VAT. http://www.accaglobal.com/students/acca/exams/f6/syllabus

Learner name  Group 6  Date issue  Completion date  10.02.2013  06.04.2013  Qualification  Pre‐Master Course (Business Studies)