Executive of the company as per recent

ExecutiveSummaryThe main purpose of this report is toanalysis the financial Statements of Industria Reit Ltd and comment on thereports.

The report will identify the different equities which are mentioned inthe financial records and state the causes of changes which may be in thefinancial statement. The report will be focusing on the tax treatments of thecompany and analyse the company’s tax expense in comparison with previous yearfigure. The report will then conclude with an overall understanding how companyhandle tax transactions.              Table of Contents Introduction. 4 Overview of the Company.

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4 i.       Types of Equity. 4 ii.      Tax Expenses of Industria Reit 5 iii.         Tax expenses and Tax Policy of Industria Reit 5 iv.         Deferred Tax Assets/Liabilities of Industria Reit ltd.

6 v.      Income Tax Payable. 7 vi.         Difference in Income Tax Expenses. 7 vii.        Insights of Income Tax of Industria Reit ltd. 7 Conclusion. 8 Reference.

9          IntroductionCorporateAccounting may be defined as the preparation and presentation of financialinformation of a company in a financial report. The financial reports includebalance sheet, a statement of profit and loss account, cash flow statements(Dyreng, Mayew and Williams 2012). The use of a financial statement is to analysethe financial performance of the company. In other words, a financial report isa summarised report which contains the financial data of a company. Thefinancial reports are prepared following certain established principles,standards and conventions (Weil, Schipper and Francis 2013).Overview of the Company              IndustriaReit is an Australian listed company which is engaged Real Estate investmentbusiness. Its headquarters is situated in Australia.

The company has businessesin Melbourne, Sydney and Adelaide. The total valuation of the company as perrecent estimates is around $ 638 million.i.                   Types of Equity             Equityrefers to different types of stocks and securities which exists in the stock marketand which represents the ownership interest in the company. Equity is a termused to determine securities or a group of securities which gives the owner ofsuch securities, right of ownership over the company.            Thedifferent types of equity as shown in the balance sheet of Industria Reit Ltdfor the year 2015 and 2016 are discussed below:1.     Contributed Equity:  This refers to the equity of the companywhich is acquired from the public. This includes the capital which is collectedfrom the public by issue of shares and other securities.

In other words, itreflects all the stock which the shareholders have bought directly from thecompany which is issuing the shares. The contributed equity of the company was$165674000 in 2015 which decreases to amount of $165096000 in 2016 which showsthat there is a decrease in contributed equity from the past year. The reasonfor decrease in the contributed equity from last year is due to the buybackprograms which the business has undertaken.2.     Retained Earnings and Accumulated losses:Retained earning refers to that part of profits which are kept aside by thebusiness for either reinvesting in business or distribute it as profits. Itrefers to a condition where the company has distributed more dividends and hasincurred more net loss over its profits (Chadha, Corrado and Meaning 2012). Insuch a case retained earnings becomes negative and the losses are accumulatedand shown in the balance sheet until these are set off and positive retainedearnings can be gained.

The company has accumulated losses of $384000 in 2015and this becomes positive figure and shows retained earnings of $10922000.ii.                 Tax Expenses of Industria Reit            Thecompany does have any current tax expenses in the year 2016 which was in the$74000 in 2015. The company has followed tax policy as per the requirements ofAASB. The tax expense figure as shown in the financial statements is furtherbifurcated in deferred tax expenses and current tax expenses (Dhaliwal et al. 2013). The deferred tax ofIndustria Reit which is as $ 78000 in 2015 and $ 234000 in 2016.iii.

               Tax expenses and Tax Policy of Industria ReitThe tax expensesas shown by the financial statements are in accordance with relevant tax lawsand rules. There is no current tax expenses of the company for the present year2016 and only has a deferred tax benefit of $ 234000. The current tax expensesof 2015 were $ 74000 and the deferred tax was $ 78000.  The company charges taxes at the rate of 30%as per the relevant rules of Australia. The company does not have any taxexpenses for the current year as the profit which the company earns fromongoing operations amounts to $ 31027000 and the company also has control over anon-taxable trust entity which has a loss of $ 31917000 which will be set off.

After the set off is done the company has a net loss figure of $ 890000. Thetax rate is charged at the rate of 30% on the figure of $ 890000 which resultsin the tax benefit figure of $ 267000 as shown in the notes of accounts in thefinancial statement of Industria Reit. Industria Reit Ltd is in accordance withthe corporate tax rules of the country therefore the figure of current taxexpenses shown is correct as per the tax rules (Dong, Ryan and Zhang 2014).

iv.               Deferred Tax Assets/Liabilitiesof IndustriaReit Ltd            Deferredtax asset arises when the company has paid taxes in excess amount than what wasrequired (Harrington, Smith and Trippeer 2012). The company can claim taxrelief for the overpayment of taxes in future. This relief which the companyreceives is treated as an asset of the company. This is a type of prepaidexpenses and therefore these are treated as assets. On the other hand, deferredtax liabilities are completely opposite of deferred tax assets (Harrington,Smith and Trippeer 2012).

This happens when the tax liability paid by thecompany is less as compared to what is to be paid as per accounting income.            Deferredincome tax is provided on all non-permanent differences which arise onreporting date between the tax charged on assets and liabilities and theirrespective amounts for financial reporting purpose as per company’srequirements and policy (Laux 2013). The deferred tax liability of the businessfor the year 2015 is $ 2069000 and the same has increased to $ 2303000 in 2016.The main purpose of recording deferred tax assets and liabilities is toacknowledge the difference in timing of when the tax was recognized in thefinancial statements and when the tax becomes effective. Another variation forwhich deferred tax assets and liabilities may arise is due the difference intreatment of depreciations in tax and accounts. The rate charged in tax may bedifferent then what is charged as per accounting.v.

                 Income Tax Payable            Thereis no current tax asset or liability in the balance sheet as shown in thefinancial statements for the year 2016. However, there was income taxrecoverable of $ 82000 in the year 2015. This figure is shown in the other assetsin the balance sheet for the year 2015. The notes to accounts show that otherassets contain an income tax recoverable of $ 82000 for the year 2015.vi.               Difference in Income TaxExpenses            Thecash flow statement shows that there is tax refund of $ 71000 in 2016 and thetax paid in 2015 was $ 437000. There is a difference between the figures shownin cash flow statement and figures shown in profit and loss account.  The company may be following the policy ofpaying tax in quarterly basis or in half yearly basis.

The company may havejust followed this policy and paid for a quarter or half year and thus thedifference may have happened (Taylor and Richardson 2012). Another reason maybe that the income tax expense as shown in the profit and loss account containsthe current tax liability which the company incurs in current year as well asdeferred tax liability which arises due difference in treatment of transactionsin tax and accounts. vii.             Insights of Income Tax of Industria Reit Ltd            Theanalysis of the financial reports of Industria Reit Ltd shows that the companyfollows the AASB 112 for estimating the taxes of the company. The tax rate andlaws which the company follows are in force and active during the reportingdate. The company maintains deferred tax liabilities which can be adjustedagainst tax which are to be paid in the future years.

Deferred income taxassets are recognised in the financial statements for all deductible temporarydifferences, carry-forward of unused tax assets and unused tax losses. Thecompany follows tax consolidation structure for its operating business and non-taxabletrust.Conclusion            Themain aim of this assignment is to analysis the annual financial report ofIndustria Reit. The assignment will be covering the different types of equitywhich the company has shown in the balance sheet and cover the areas of howmuch tax the company pays and if there is any deferred tax or current taxassets in the financial report of the company. The report also states the tax rate at which the company is charged withand the reasons as to why the tax paid as shown in cash flow statement differsfrom the tax payments in the profit and loss statement.        ReferenceChadha, J.S., Corrado, L.

and Meaning, J.,2012. Reserves, liquidity and money: an assessment of balance sheet policies.

Dhaliwal, D.S., Kaplan, S.E., Laux, R.C.and Weisbrod, E.

, 2013. The information content of tax expense for firmsreporting losses. Journal of Accounting Research, 51(1),pp.

135-164.Dong, M., Ryan, S. and Zhang, X.

J., 2014.Preserving amortized costs within a fair-value-accounting framework:Reclassification of gains and losses on available-for-sale securities uponrealization. Review of Accounting Studies,19(1), pp.242-280.Dyreng, S.D.

, Mayew, W.J. and Williams, C.D.,2012.

Religious social norms and corporate financial reporting.Journal ofBusiness Finance & Accounting, 39(7?8), pp.845-875.

Harrington, C., Smith, W. and Trippeer, D.,2012. Deferred tax assets and liabilities: tax benefits, obligations andcorporate debt policy. Journal of Finance and Accountancy, 11,p.1.Harrington, C.

, Smith, W. and Trippeer, D.,2012. Deferred tax assets and liabilities: tax benefits, obligations andcorporate debt policy. Journal of Finance and Accountancy, 11,p.1.Laux, R.C.

, 2013. The association betweendeferred tax assets and liabilities and future tax payments. TheAccounting Review, 88(4), pp.1357-1383.Taylor, G.

and Richardson, G., 2012.International corporate tax avoidance practices: evidence from Australianfirms. The International Journal of Accounting, 47(4),pp.469-496.

sWeil, R.L., Schipper, K. and Francis, J.,2013. Financial accounting: an introduction to concepts, methods anduses.

Cengage Learning.


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