The key objective of this assignment is to analyse
the annual financial report of Industria Reit ltd and comment on the same. The
report will be recognizing different kind of equities which are depicted in the
annual financial reports of Industria Reit and also access the reason for the
changes in the value of equity in the financial statements. The report will be
providing more emphasis on the treatment of taxes of the company and analyse
the tax expenses of the company in contrast with figures of previous year. The
report will then be concluding with how the company will be handling its taxes
and also deal with the current and deferred tax expenses in the company.
Table of Contents
Overview of the Company. 3
i. Equities of Industria Reit 3
ii. Tax Expenses of Industria Reit 4
iii. Taxation Policy of Industria Reit 4
iv. Deferred Tax Treatments of Industria Reit 5
v. Tax Assets/Liabilities of Industria Reit Ltd. 5
vi. Difference in Income Tax Expenses. 6
vii. Tax Structure of Industria Reit 6
Accounting is defined as the process of preparing of financial reports of a
company in a systematic and presentable manner which can display the financial
performance of the particular in that particular year. The financial reports of
any organisation consist of a Consolidated statement of profit and loss, a
consolidated Balance sheet and a Consolidated Balance Sheet (Wang, C., 2014). The
main purpose of a financial report is to show the financial performance of the
company in a particular year. In other words a financial report is a summarised
report which contains the financial data of a company. The financial reports
are prepared following certain established principles, standards and
Overview of the Company
Reit is an Australian listed company which is engaged Real Estate investment
business. Its headquarters is situated in Australia. The company has businesses
in Melbourne, Sydney and Adelaide. The total valuation of the company as per
recent estimates is around $ 638 million (Industriareit.com.au.2018).
Equities of Industria Reit
stocks or securities which the company issues to the public in order to acquire
capital are shown as equities in the balance sheet of the company. These types
of equities may comprise of shares, bonds and other marketable securities (Koijen,
Lustig and Van Nieuwerburgh 2017).
per the balance sheet of Industria Reit, the company has two items as shown as
Contributed Equity: This means the equity capital of the company
which is contributed by the public when shares are issued by the company. This
is the capital which is contributed by the investors to the company as
investments in shares. In other words, it is a figure which shows all the stock
which the investors invest in during a particular year in the company. The contributed
equity of the company was $165674000 in 2015 which decreases to amount of $165096000
in 2016 which shows that there is a decrease in contributed equity from the
past year. The reason for decrease in the contributed equity from last year is
due to the buyback programs which the business has undertaken.
Retained Earnings: Retained earning refers
to that part of profits which are kept aside by the business for either
reinvesting in business or distribute it as profits. Accumulated losses refer
to a situation where the company does not have profits and has incurred loss
over some years which has accumulated over the years. In most practices in
accounts, retained earnings are used to set off accumulated losses of the
company so that the balance sheet is cleared out of such accumulated losses.
The company has accumulated losses of $384000 in 2015 and this becomes positive
figure and shows retained earnings of $10922000.
Tax Expenses of Industria Reit
company does have any current tax expenses in the year 2016 which was in the
$74000 in 2015. The company follows the relevant tax policies which is as
required by AASB. Deferred tax and current tax expenses combined together makes
up the tax expense of the company. The deferred tax of Industria Reit which is
as $ 78000 in 2015 and $ 234000 in 2016.
Taxation Policy of Industria Reit
follows all the tax laws which are in force in the country. There are no
current tax expenses of the company for the present year 2016 and only has a
deferred tax benefit of $ 234000. The current tax expenses of 2015 was $ 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 tax expenses for the current year as the profit
which the company earns from ongoing operations amounts to $ 31027000 and the
company also has control over a non taxable trust entities 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 (Sialm and Starks 2012). The tax rate is charged at the rate of 30%
on the figure of $ 890000 which results in the tax benefit figure of $ 267000
as shown in the notes of accounts in the financial statement of Industria Reit.
Deferred Tax Treatments of Industria
tax asset and Deferred Tax liabilities are both related to the tax treatments
which is followed in the company. The deferred tax assets and deferred tax
liabilities arises due to temporary difference between accounting treatments
and tax treatments. The deferred tax liability of the business for the year
2015 is $ 2069000 and the same has increased to $ 2303000 in 2016. One of the
examples to a situation where deferred tax assets or liabilities arise is in treatment of depreciations which have
separate treatment in accounts and tax as well (Wahab and Holland 2012).
Tax Assets/Liabilities of
Industria Reit Ltd
is no current tax asset or liability in the balance sheet as shown in the
financial statements for the year 2016. However there was income tax
recoverable of $ 82000 in the year 2015. This figure is shown in the other
assets in the balance sheet for the year 2015 (Gallemore, Maydew and Thornock
2014). The notes to accounts show that other assets contain an income tax
recoverable of $ 82000 for the year 2015.
Difference in Income Tax
cash flow statement shows that there is tax refund of $ 71000 in 2016 and the
tax paid in 2015 was $ 437000. There is a difference between the figures shown
in cash flow statement and figures shown in profit and loss account. The system in which the company pays its
taxes can also be a reason for the difference in income tax expenses. Another
reason may be that the income tax expense as shown in the current year also
contains part of deferred tax assets which might have caused the variation.
Tax Structure of
financial reports analysis of Industria Reit ltd shows that the company follows
the AASB 112 in order to calculate the tax of the company. The company has a deferred
tax liabilities which can be used to adjust the taxes which are to be paid in
future. Deferred income tax assets are recognised in the financial statements
for a variety of reasons which are mainly due to difference in treatment of tax
and accounts or due to excessive tax paid or not paid in the previous years. The
company follows tax consolidation structure for its operating business and non
The main aim of this assignment is to analysis the annual
financial report of Industria Reit. The assignment will be covering the
different types of equity which the company has shown in the balance sheet and
also cover the areas of how much tax the company pays and also if there is any
deferred tax or current tax assets in the financial report of the company. The report also states the tax rate at which
the company is charged with and the reasons as to why the tax paid as shown in
cash flow statement differs from the tax payments in the profit and loss
Gallemore, J., Maydew,
E.L. and Thornock, J.R., 2014. The reputational costs of tax avoidance. Contemporary
Accounting Research, 31(4), pp.1103-1133.
Industria REIT. (2018). Industriareit.com.au.
Retrieved 21 January 2018, from http://www.industriareit.com.au
Koijen, R.S., Lustig, H.
and Van Nieuwerburgh, S., 2017. The cross-section and time series of stock and
bond returns. Journal of Monetary Economics.
Sialm, C. and Starks, L.,
2012. Mutual fund tax clienteles. The Journal of Finance, 67(4),
Wang, C., 2014.
Accounting standards harmonization and financial statement comparability:
Evidence from transnational information transfer. Journal of Accounting
Research, 52(4), pp.955-992.