Corporate governance consequence of account - MyAssignmenthelp.com

Question: Discuss about the Corporate governance consequence of account. Answer: Discussing any changes in each item of equity for the firm over the past years, while articulating the reasons for the change: Figure 1: The equity statement of Ding Sheng Xin Finance Co. Limited during 2015 (Source: Dsxfinance.com.au. 2018) The equity section of Ding Sheng Xin Finance Co. Limited during the fiscal year of 2015 has adequately changed in comparison to 2014. Moreover, this equity section mainly comprises of issued capital, reserves and retained earnings. Issued capital is mainly identified to be the overall capital that is accumulated by the company by issuing shares. this is an essential way in accumulating the relevant capital that is needed by the organization to support it financing and daily activities. for the remove the shoot capital of Ding Sheng Xin Finance Co. Limited mainly increased from the levels of $82,077,000 in 2014 to $83,550,000 in 2015, which indicates relevant share issue conducted by the organization (Dsxfinance.com.au. 2018). Reserves is mainly identified to be the second listing in the equities action, which holds relevant income of the organization during past fiscal years. The Reserve account is mainly identified to be the overall savings that is conducted by the organization to support his future activities. Currently Ding Sheng Xin Finance Co. Limited reserves has mainly increased from the levels of $22,516,000 in 2014 to $32,930,000 in 2015, which indicates a positive sign for the organization (Dsxfinance.com.au. 2018). Companies use the Reserve account to accumulate relevant income over the past years to support its future financing activities (Domino, Wingreen and Blanton 2015). Retained earnings was the third listing which was conducted in the equity section of Ding Sheng Xin Finance Co. Limited. Retained earnings are mainly the overall income that is generated by the company during the fiscal year after paying all its debts, taxes, and dividends. Retained income are used by the organization, as reserve after commencement of the fiscal year (Chaibi, Trabelsi and Omri 2014). The retained income of the organization has relatively increased from the levels of $28,919,000 in 2014 to $38,948,000 in 2015 (Dsxfinance.com.au. 2018). This relevantly indicates the overall ability of the organization to hold the income generated during the fiscal year. Depicting tax expense of the firm in its latest financial statements: Figure 2: The income statement of Ding Sheng Xin Finance Co. Limited during 2015 (Source: Dsxfinance.com.au. 2018) From the evaluation of above figure relevant tax expenses that is conducted by the company during the fiscal year is identified. The income tax expense amount is mainly at the levels of $2,409,000 during this fiscal year of 2015 (Dsxfinance.com.au. 2018). This tax expenses mainly increased from the levels of $1,491,000 in 2014, which reduces profit level of Ding Sheng Xin Finance Co. Limited. The overall tax expenses of the company has relatively increased over time, which is mainly due to the rising tax expense incurred by the company. However, from the overall evaluation profit before tax during the 2015 has decreased in comparison with 2014, while the actual tax has increased. This indicates that the tax rate of the company on an average has been identified to be at the levels of 18%, which was previously identified to be at 11%. This rising in the income tax level has directly raised the tax expenses incurred by the company (Warren and Jones 2018). Depicting whether the figure identified, as tax expense is same as the rate of tax of firms income: Figure 3: The income tax statement of Ding Sheng Xin Finance Co. Limited during 2015 (Source: Dsxfinance.com.au. 2018) The income tax statement presented in the notes to balance sheet directly indicates the tax expenses of the organization. From the valuation it could be understood that the figure is not same as the company tax rate times the accounting income. This is mainly since that tax expenses are conducted on two different rates, which changes the actual tax of the organization. The Australian assessable earnings are taxed at 30%, while the Chinese assessable income is taxed at 15% (Dsxfinance.com.au. 2018). This relevantly depicts the overall changes in tax that is conducted by the organization during the fiscal year. In the notes to balance sheet the organization has listed the applicable weighted average efficient tax rate, as 18% for the fiscal year. The actual expenses incurred by the organization during the fiscal year that only different as per the tax rate (Agrawal and Cooper 2017). Prima Facie tax payable are mainly conducted by the organization during the fiscal year, which mainly in creases the payment of tax. The overall profit before income tax of the organization mainly declined from $13,336,000 in 2014 to $13,023,000 in 2015. However, the income tax expense of the organization increased from $1,491,000 in 2014 to 2,409,000 in 2015.This is mainly achieved due to the increment in average effective tax rate of Ding Sheng Xin Finance Co. Limited.from 11% in 2014 to 18% in 2015 (Dsxfinance.com.au. 2018). Commenting on the deferred tax asset and liabilities that is been maintained by the company during the fiscal year and stating why they have been recorded: Figure 4: Notes to income tax of Ding Sheng Xin Finance Co. Limited during 2015 (Source: Dsxfinance.com.au. 2018) The annual report of Ding Sheng Xin Finance Co. Limited mainly helps in identifying the overall deferred tax, which is mentioned in the financial statement. From the valuation the company has not declare any deferred tax asset or liabilities during the fiscal year, which is mentioned the notes to financial statement. The notes to financial statement mainly indicates the overall income tax expense, which is incurred by the company during the fiscal year. From the overall evaluation there is no presence of deferred tax in the financial accounting of Ding Sheng Xin Finance Co. Limited. Thus, no recognition can be identified from the evaluation, where no effect on accounting or taxable profit or loss is determined (Fanning 2015). Depicting whether the current tax assets or income tax payable recorded by the company, while depicting why income tax payable is not same as income tax expense: Figure 5: Current assets of Ding Sheng Xin Finance Co. Limited during 2015 (Source: Dsxfinance.com.au. 2018) The evaluation of current assets listed in the above figure mainly helps in identifying the current tax assets of the organisation during 2015. The overall current asset of the organisation during 2015 is relatively nil, whereas during 2014 the current tax assets was at the levels of $20,000 (Dsxfinance.com.au. 2018). The current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective assets and liabilities. There is no income tax payable recorded by the organisation during the fiscal year of 2015, which is not same as income tax expense. The income tax expense is not as same as the income tax payable of the organisation (Shapiro 2015). Depicting whether the income tax expense shown in income statement is same as the income tax paid in cash flow statement: Figure 6: Income and cash statement of Ding Sheng Xin Finance Co. Limited for 2015 (Source: Dsxfinance.com.au. 2018) From the evaluation of both income statement and cash flow statement relevant income tax expenses and income tax paid by Ding Sheng Xin Finance Co. Limited can be identified. The income tax expense listed in the income statement is mainly at the levels of 2,409,000, while the actual tax expense paid listed in cash statement is $1,830,000 (Dsxfinance.com.au. 2018). This is mainly due to the credit sales conducted by the company, which is not received by the company in the current fiscal year. Moreover, the tax paid during the fiscal year is on the actual cash received by the company during the year. On the other hand, tax expense depicted in the income statement mainly holds the actual income tax that needs to be paid by the company on the revenue generated (Uyar 2017). Depicting what in the analysis is found to be interesting, confusing, surprising or difficult to understand about the treatment of tax in the firm: From the evaluation of annual report of Ding Sheng Xin Finance Co. Limited relevant tax rate and tax paid amount conducted by the company during 2015 was mainly surprising. The overall tax rate for the company was at the levels of 18% on an average, where tax expense of the company was conducted. The company mainly pays two different tax rates one in Australia and one in China. The assessable income generated from Australia is mainly taxed at the 30%, while the overall assemble income generated in China is taxed at the rate of 15% (Dsxfinance.com.au. 2018). This was relevant different format of taxation method that was used by the company during the fiscal year, which could help in reducing the tax income. On the other hand, the actual tax paid by the company during the fiscal was actually high, where profit before tax is relatively low in comparison with precious year. this was mainly due to the average increment in tax rate of the company. Reference Agrawal, A. and Cooper, T., 2017. Corporate governance consequences of accounting scandals: Evidence from top management, CFO and auditor turnover.Quarterly Journal of Finance,7(01), p.1650014. Balakrishnan, K., Watts, R. and Zuo, L., 2016. The effect of accounting conservatism on corporate investment during the global financial crisis.Journal of Business Finance Accounting,43(5-6), pp.513-542. Bebbington, J., Unerman, J. and O'Dwyer, B. eds., 2014.Sustainability accounting and accountability. Routledge. Chaibi, H., Trabelsi, S. and Omri, A., 2014. Investment opportunity set, corporate accounting policy and discretionary accruals.Journal of Economic and Financial Modelling,1(1), pp.1-12. 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