Corporate Accounting

Executive summary
This report is doing based on the corporate accounting practice. In this report three companies
three years annual reports are discussed to find out various relative information about those
companies. All the items of equity and liabilities are discussed briefly and fining out various
changes in this regard. Cash flow statement and other comprehensive statement is also discussed
in this report. Finally, some analysis based on the accounting for taxation is done in this report.
Table of Contents
Executive summary.........................................................................................................................2
Introduction......................................................................................................................................4
Analyzing ‘Equity and Liability’ of Argent Minerals Limited, Ardiden Limited and Anova
Metals Limited.................................................................................................................................5
Listing all the Equity items and discussing any changes in those items in the last three years
2016,2017 and 2018 respectively................................................................................................5
Listing all the liabilities items and discussing any changes in those items in the last three years
in 2016, 2017 and 2018 respectively...........................................................................................5
Comparative analysis of the debt and equity position of the selected three companies from the
annual report of 2016, 2017 and 2018.........................................................................................6
Discussing the cash flow statements of the Argent Minerals Limited, Ardiden Limited and
Anova Metals Limited based on the annual reports of 2016,2017 and 2018 respectively..............7
Listing all of the cash flow items and discussing any changes relating to those items in 2016,
2017 and 2018 respectively.........................................................................................................7
Comparative analysis of the three board categories of the cash flow statement in the context of
the Argent Minerals, the Ardiden Limited and the Anova Metals Limited.................................8
Comparative analysis of cash flow of the Argent Minerals Limited, Ardiden Limited and
Anova Metals Limited.................................................................................................................9
Discussing other comprehensive income statements for the Argent Minerals Limited, Ardiden
Limited and Anova Metals Limited...............................................................................................10
Listing all the items of the other comprehensive income statements on the basis of the last
three years annual reports of the selected three companies.......................................................10
Discussing the reasons for which these income are not included in the income statement.......10
Providing a comparative analysis and discussing the effect of inclusion other comprehensive
income in the income statement on the shareholders................................................................11
Discussing the impact of other comprehensive income in the evaluation of the performance of
the mangers and the company....................................................................................................11
Discussing about the accounting of the corporate tax in the context of the Argent Minerals
Limited, Ardiden Limited and Anova Metals Limited..................................................................12
Identifying the tax expenses in the of the Argent Minerals Limited, Ardiden Limited and
Anova Metals Limited according to the last three years financial statements...........................12
Calculating the rate of effective tax for the Argent Minerals Limited, Ardiden Limited and
Anova Metals Limited and finding out the highest tax paying company..................................12
Discussing the core reasons for which deferred tax liabilities and deferred tax assets are
reported in the balance sheet......................................................................................................13
 Calculating cash tax amount by using the deferred tax asset and liability in the context of the
selected three companies...........................................................................................................15
Calculating the cash tax rate and the highest rate of cash tax rate paying company in the
context of the three selected companies....................................................................................15
The reason for which cash tax rate is different from book tax amount.....................................16
Conclusion.....................................................................................................................................17
References......................................................................................................................................18
Introduction
Argent Minerals Limited is a company that is listed as a public limited company under ASX. It is
a mining company which is doing discovery, extraction and marketing work for the various
precious metals. It is situated in the New South Wales, Australia. It is one of the most reputed
business organization in this sector. Ardiden Limited is another company which is listed under
the material sector of the ASX. It is an exploration company which has operating its operation in
Australia with great reputation. Its main operation is to explore, evaluate and development
activities for various precious metals. Anova Metals Limited is also a company that is listed in
the ASX. It is listed under the material sector. It is operating its operation in Australia. It has
some holding companies as well. It was founded in 2010.
Analyzing ‘Equity and Liability’ of Argent Minerals Limited,
Ardiden Limited and Anova Metals Limited
Listing all the Equity items and discussing any changes in those items in the
last three years 2016,2017 and 2018 respectively
Argent Minerals Limited, Ardiden Limited and Anova Metals Limited all of these three
companies are listed in the Australian Securities Exchange under the sector of materials. These
companies are operating in accordance with the Australian law and present their financial
information to both of the internal and external users in accordance with the standards developed
by the Australian Accounting Standards Board (AASB) which is an agency of Australian
government. For analyzing their financial statements, their last three years annual report
(2016,2017 and 2018) are discussed. Here all the equity items of all of these three companies are
given below:

List of the Equity Items Argent Minerals Limited Ardiden Limited Anova Metals Limited
2016 2017 2018 2016 2017 2018 2016 2017 2018
Issued capital $24,343,436 $28,090,527 $29,274,380 $35,787,168 $36,744,431 $47,817,992 $34,947,123 $44,747,741 $60,448,614
Reserves $61,796 $143,636 $193,529 $93,828 $158,623 $2,425,128 $1,863,007 $3,326,100
Accumulated losses ($23,771,816) ($25,830,094) ($27,530,820) ($30,599,117) ($31,300,570) ($34,053,019) ($24,980,833) ($28,157,576) ($43,276,761)

From the last three years annual report of Argent Minerals, Ardiden Limited and Anova Metals
Limited, it is identified that all of these three companies have same kinds of equity items in their
companies’ financial reports. First item that is included in the equity section is issued capital.
Issued capital is the paid-up capital of the business. It is acquired by a business by selling its
share. All of these three companies issued capital are increased from 2016 to 2018. For Anova
Metals Limited is increase rate is the highest. The second item of the equity section of these
companies is reserves. Reserves are something that the companies preserved for future. This
fund is accumulated from the shareholders income. For all of these three companies’ reserves are
increasing. The increase rate of Anova Metals is highest in 2018 than all other companies.
Accumulated losses that are presented in the equity section of the financial statements can make
negative impacts on the company’s equity.
Listing all the liabilities items and discussing any changes in those items in the
last three years in 2016, 2017 and 2018 respectively
All the liabilities item from all balance sheets of Argent Minerals, Ardiden Limited and Anova
Metals Limited are given below,

List of the Liabilities Items Argent Minerals Limited Ardiden Limited Anova Metals Limited
2016 2017 2018 2016 2017 2018 2016 2017 2018
Current Liabilities
Trade and other payables $96,106 $120,685 $125,787 $264,819 $590,575 $535,899 $347,469 $314,392 $3,953,705
Employee entitlements $52,057 $57,225 $91,326
Advance money receipt from share replacement $360,520
Borrowings $3,000,000
Rehabilitation Provision $2,573 $9,983 $28,747 $49,644 $37,951
Non-current Liabilities
Rehabilitation Provision $182,150 $585,554
Deferred tax liabilities $356,726

Here all the liabilities items from the annual reports 2016, 20177 and 2018 of Argent Minerals,
Ardiden Limited and Anova Metals Limited are presented. All of these three companies have
trade and other payables in their balance sheet which is a current liability item that occurred
when they have purchased something on credit. Trade and other payables items are increasing
throughout all these three years. Some specific amount of borrowings is reported in 2016 in the
balance sheet of Argent Minerals Limited. There are two non- current items are there in the
balance sheet of Anova Limited. These are rehabilitation provision and deferred tax liabilities.

Comparative analysis of the debt and equity position of the selected three
companies from the annual report of 2016, 2017 and 2018
A comparative analysis of the debt and the equity positions among the Argent Minerals, the
Ardiden Limited and the Anova Metals Limited from their annual reports of 2016, 2017 and
2018 are presented below:

Argent Minerals Limited Ardiden Limited Anova Metals Limited

Relatively small paid up Moderate paid up capital
capital
Current ration is 7.70 in 2018
Acid test ratio is 7.70 in 2018
No deferred tax liabilities
Highest paid up capital
Current ratio is 12.67 in 2018 Current ratio is 0.50 in 2018
Acid test ratio is 12.25 in Acid test ratio is 0.10 in 2018
2018
No deferred tax liabilities Deferred tax liabilities of
$356,723 is reported in 2018
Discussing the cash flow statements of the Argent Minerals Limited,
Ardiden Limited and Anova Metals Limited based on the annual
reports of 2016,2017 and 2018 respectively
Listing all of the cash flow items and discussing any changes relating to those
items in 2016, 2017 and 2018 respectively.
Cash flow statement is a part of company’s financial statements that is also known as the
statement of cash flow. In an income year the accumulated amount of cash in and cash out from
a business organization is managing and reported in the cash flow statement. Cash is the most
liquid asset of a company. It should be recorded in such a way that can provide true and fair
information about the most liquid asset of the company. Here all the items from the cash flow
statements are presented from the annual reports of 2016,2017 and 2018 of the three selected
companies.

List of the Cash Flow Statement's Items Argent Minerals Limited Ardiden Limited Anova Metals Limited
2016 2017 2018 2016 2017 2018 2016 2017 2018
Cash flow from operating activities
Cash receipt in course of operation $289,326 $709,248 $693,749 $3,725,313
Government subsidy $47,988 $175,878 $141,966
Exploration and evaluation expenditure ($1,866,470) ($1,955,082) ($1,531,308) ($990,006) ($1,859,821) ($1,986,706)
Cash payment in course of operation ($647,508) ($805,508) ($811,332) ($447,149) ($541,840) ($1,027,426) ($1,256,577) ($1,443,791) ($6,744,094)
Interest received $11,611 $19,364 $24,504 $6,336 $43,534 $12,178 $14,196 $45,626 $24,232
Payment for exploration bond ($116,093)
Finance cost ($437,942)
Cash flow from investment activities
Payment for plant and equipment ($7,076) ($51,649) ($24,871) ($1,488) ($204,093)
Proceeds from plant and equipments $100,909
Payments for deposits ($21,000) ($28,000) $11,900
Payment for mine development ($4,526,756)
Loan provided to extra resources ($2,000,000)
Cash gain on purchased on extra resources $1,792,523
Payments for deposits exploration expenditure ($1,152,078) ($2,405,997) ($4,226,514)
Proceeds from research and development rebate $156,099
Cash flow from financial activities
Proceeds from issue of share $2,039,922 $1,200,000 $3,674,479 $5,405,755 $565,000 $10,852,950 $2,175,875 $10,299,874
Cost of issue of share ($150,232) ($84,147) ($84,147) ($137,300) ($204,986) ($295,038) ($140,376) ($547,256) ($30,230)
Advance money received from share placement $360,520 $360,520
Proceed from borrowings $3,000,000
Proceeds from exercise of option $116,840

Here all the items of the cash flow statements of the three selected companies namely the Argent
Minerals, the Ardiden Limited and the Anova Metals Limited are presented. Generally, in a cash
flow statement, there are three main sectors. These are cash flow from operating activities, cash
flow from investment activities and cash flow from financial activities. Cash flow from the
operating activities are consists of cash receipt from the operation which increase the cash inflow
in the organization. Cash payment from the operation means cash paid in a particular period for
the operating activities of the company. For the Argent Minerals Limited in all three years their
cash flow from operating activities provide information that the company has consistently
negative cash flow from the operating activities. These situations are quite similar for the other
two companies. The Ardiden Limited and the Anova Metals Limited also have negative cash
flow from the operating activities.

In the second section of the cash flow statement, the investment activities are presented. Cash
flow from the investment activities represent cash inflow from the selling of any fixed assets and
cash outflow from the purchase of any fixed assets. All of three companies have negative cash
flow that means cash outflow that is more than cash in flow in consistently three years of
2016,2017 and 2018. Third one is the cash flow from financial activities. Sells proceeds and
issue of share are the sources of cash inflow and outflow of this section respectfully. All of the
three companies have positive sum of cash flow from this segment over the last three years.

Comparative analysis of the three board categories of the cash flow statement
in the context of the Argent Minerals, the Ardiden Limited and the Anova
Metals Limited
Cash flow statement records and represent the net amount of cash inflow and cash outflow in a
particular period of time generally one year. There are three board areas of cash flow statement.
These are:

1. Cash flow from operating activities

2. Cash flow from investing activities
3. Cash flow from financial activities

Cash flow from operating activities: Cash flow from operating activities are the activities that
are generate cash from the operating or regular business operation. It is the first section of the
statement of cash flows. In this section cash inflow and outflow of a business is recorded that are
come from the operating activities of a business organization such as buying and selling
merchandise and so on.
Cash flow from investing activities: Cash flow from investment activities is the second section
of a cash flow statements which records and reports all the cash inflows and outflow of a
business organization within a particular period of time. Investing activities are mainly cash
inflows are occurred from selling fixed assets and cash outflows are occurred from the purchase
of new fixed assets.

Cash flow from financial activities: Cash flow from financial activities are cash flows that are
come from the financial activities of the company. Financial activities mean cash inflow by
issuing new share or financial instruments and cash outflow by purchasing back company’s own
share or buying others company’s shares.

Here a comparative view is shown for the cash flow statements of the selected three companies,
so that the investors can get a clear review about the true scenario of the most liquid asset of the
company which is cash.

Particulars Argent Minerals Limited Ardiden Limited Anova Metals Limited

2016 2017 2018 2016 2017 2018 2016 2017 2018
Cash flow from operating activities ($2,185,053) ($186,100) ($1,482,421) ($440,813) ($498,206) ($1,015,248) ($2,232,357) ($3,257,986) ($5,535,290)
Cash flow from investing activities ($28,076) ($79,649) ($12,921) ($995,979) ($2,406,962) ($426,527) ($1,488) ($8,837,413)
Cash flow from financial activities $2,250,210 $3,315,995 $1,115,853 $5,268,455 $360,014 $1,674,752 $2,035,499 $9,752,618 $2,969,770

Comparative analysis of cash flow of the Argent Minerals Limited, Ardiden

Limited and Anova Metals Limited
For analysis a comparative view on the cash flow statements of the three companies namely the
Argent Minerals Limited, Ardiden Limited and Anova Metals Limited, their three years annual
report of 2016,2017 and 2018 are discussed respectively. Here it is easily identified that the first
two section of the cash flow statement that are the cash flow from operating activities and cash
flow from investing activities present negative cash flow. That means in the operating and
investing activities, cash inflow is less than the cash outflow. The last section of cash flow
statement for all three companies are presented a positive view of the cash flow which means
cash inflow from the financial activities are higher than the cash outflow.
Discussing other comprehensive income statements for the Argent
Minerals Limited, Ardiden Limited and Anova Metals Limited
Listing all the items of the other comprehensive income statements on the
basis of the last three years annual reports of the selected three companies.
In the income statement, there is a separate section that is called other comprehensive income
statement. In other comprehensive income statement certain income, expense and related
accounts are included in there that are come from the irregular business operation. So, these
items are separately included in income statements. In the context of the Argent Minerals
Limited, Ardiden Limited and Anova Metals Limited, some of their irregular items are included
in the other comprehensive income statements that are listed below:

In the context of, the Argent Minerals Limited, there are no other comprehensive incomes are
reported according to the last three income year of 2016,2017 and 2018.

In the context of, the Ardiden Limited, there is only one item is reported in the other
comprehensive income. That is,

 Exchange differences in foreign operation

In the context of the Anova Metals Limited, there are no income which might be reported in the
other comprehensive income statement.

Discussing the reasons for which these incomes are not included in the income
statement
Comprehensive income is not reported in the income statement with the regular operating
income of the business. It is the income segment where incomes are reported which comes from
regular business operation. These types of incomes are coming non-owner sources of operation.
In this segment of income statement, unrealized income, gain, loss is included in the
comprehensive income statements. In an income statement, income and expenses are included
that are gained from the regular operation of business. Income statement is one of the most
important statement of a business that is published from the business for the internal and external
users for decision making purpose. But there are some information’s that are not included in the
income statement because of their irregularity. This unrealized incomes and expenses that are not
included with the regular operation of the business may not have importance’s in the decision-
making process of the business and may be the companies are not willing to disclose that
information. Companies want to get tax benefit from these incomes as well. So, these items are
reported separately.

Providing a comparative analysis and discussing the effect of inclusion other

comprehensive income in the income statement on the shareholders.
A comparative analysis of other comprehensive income of the Argent Minerals Limited, Ardiden
Limited and Anova Metals Limited is provided below:

Items in the other comprehensive income statements Anova Metals Limited

2016 2017 2018
Exchange differences of foreign exchanges $235,112 ($246,994) $434,329

There are no comprehensive incomes that are reported in the income statements of the Argent
Minerals Limited and The Ardiden Limited. They reported every income as their regular
operating income. So, they are not reporting any income in the other comprehensive income
statement. Only the Anova Metals Limited has reported one item in the other comprehensive
income statement. The company has reported exchange differences of foreign exchanges as
another comprehensive income. The company has reported compressive income in the year of
2016 and 2018 and has reported a comprehensive loss in the year of 2017.

Discussing the impact of other comprehensive income in the evaluation of the

performance of the mangers and the company.
Other comprehensive income of the income statement has some importance in the course of
business. It is not included in the net income of the business. So, it has a very little impact in the
equity section of the business. But it has some other impact on the business organization. The
regular operating incomes are reported in the income statement. But it has some drawback. The
income statement can be manipulated by the management of the business operation. So, it can
provide wrong information to the stakeholders. But all the users of the business can get true
information from the income statements. So, the true performance level of the business can be
evaluated by the stakeholders of the business. And from the evaluation of the company, the
performances of the managers can also be evaluated.
Discussing about the accounting of the corporate tax in the context
of the Argent Minerals Limited, Ardiden Limited and Anova Metals
Limited
Identifying the tax expenses in the of the Argent Minerals Limited, Ardiden
Limited and Anova Metals Limited according to the last three years financial
statements
Tax expenses of the Argent Minerals Limited according to the financial statements of
2016,2017 and 2018

Particulars 2016 2017 2018

Tax $364,560 $583,020 $470,891
(expenses)/benefits

Tax expenses of the Ardiden Limited according to the financial statements of 2016,2017 and
2018

Particulars 2016 2017 2018

Tax $164,989 $132,900 $826,635
(expenses)/benefits

Tax expenses of the Anova Metals Limited according to the financial statement of 2016,2017
and 2018

Particulars 2016 2017 2018

Tax $628,854 $935,754 $4,4881,772
(expenses)/benefits

Calculating the rate of effective tax for the Argent Minerals Limited, Ardiden
Limited and Anova Metals Limited and finding out the highest tax paying
company
The effective tax rate can be calculated directly from the income statements. It is the rate of
average tax that are paid by the companies to the government. The formula of calculating
effective tax rate is,
Income tax expense/Earning or loss before tax. The effective tax rate is calculated for each of the
three companies below:

The Argent Minerals Limited

Particulars 2016 2017 2018

Effective Tax Rate 30% 27.50% 27.50%

The Ardiden Limited

Particulars 2016 2017 2018

Effective Tax Rate 28.50% 27.50% 30%

The Anova Metals Limited

Particulars 2016 2017 2018

Effective Tax Rate 28.50% 27.50% 27.50%

In 2016, the Argent Minerals Limited had paid the highest amount of tax as, their effective tax
rate is highest. In 2017, all the companies had paid the same tax amount. In 2018, the Ardiden
Limited has paid the highest tax amount that is 30%. An important point about their tax
expenditure is that all of the three companies have gone through losses consistently in the last
three years of 2016, 2017 and 2018 respectively. So, their tax expense is reported as the income
tax benefit in all three years.

Discussing the core reasons for which deferred tax liabilities and deferred tax
assets are reported in the balance sheet
Deferred tax assets: Deferred tax asset is a balance sheet item. It is regarded as an asset because
it can reduce the amount of taxable income. It is created when any company calculate its tax
payable amount higher than its original tax liability to the government. But the company paid the
accurate amount of tax for which they are liable to the government. So, the difference amount is
reported as deferred tax income in the current asset section of the balance sheet.

Deferred tax liabilities: It is also a balance sheet item which is opposite to the deferred tax
asset. It is created when the original tax amount is higher than the calculated tax payable amount.
It can occur when the company has shortage of fund and the management want to keep some tax
amount due for the future. It is reported as a current liability in the balance sheet.

Discussed about the increase and decreased amount of deferred tax liabilities and deferred tax
assets in the context of the Argent Minerals Limited, the Ardiden Limited and the Anova Metals
Limited

In the context of the Argent Minerals Limited

Particulars 2016 2017 2018

Deferred tax assets $6,785,899 $6,657,686 $6,810,882
Deferred tax
liabilities
Deferred tax assets amount had decreased from 2016 to 2017 and increased in 2018. There has
no deferred tax liability for company.

In the context of Ardiden Limited

Particulars 2016 2017 2018

Deferred tax assets $2,636,316 $2,458,677 $3,060,124
Deferred tax
liabilities
Deferred tax asset amount had decreased from 2016 to 2017 and has increased in 2018. No
deferred tax liability is reported.

In the context of the Anova Metals Limited

Particulars 2016 2017 2018

Deferred tax assets $4,834,033 $5,673,171 $10,618,462
Deferred tax $997 $1,404 $3,435,391
liabilities
The amount of deferred tax assets is increasing from 2016 to 2018. They have reported deferred
tax liabilities in all those three years and the amount is increasing from 2016 to 2018.

Calculating cash tax amount by using the deferred tax asset and liability in
the context of the selected three companies
The cash tax amount can be calculating by using this formula,

Book tax amount + changes in the deferred tax – changes in the deferred tax liability
In the context of the Argent Minerals Limited, cash tax amount is,

Particular 2016 2017 2018

Cash tax amount $944,980 $454,870 $629,087
In the context of the Ardiden Limited, cash tax amount is,

Particular 2016 2017 2018

Cash tax amount $85,329 $(44,739) $683,808
In the context of the Anova Metals Limited, cash tax amount is,

Particular 2016 2017 2018

Cash tax amount $1,054,719 $1,774,485 $4,939,307

Calculating the cash tax rate and the highest rate of cash tax rate paying
company in the context of the three selected companies
The formula for calculating the cash tax rate is,

Cash tax amount/ Earning before tax * 100

In the context of the Argent Minerals Limited, cash tax rate is,

Particular 2016 2017 2018

Cash tax rate 44% 21% 36%

In the context of the Ardiden Limited, cash tax rate is,

Particular 2016 2017 2018

Cash tax rate 14% 6% 24%

In the context of the Anova Metals Limited, cash tax rate is,

Particular 2016 2017 2018

Cash tax rate 47% 52% 27%

In 2016,2017 and 2018 consistently the Anova Metals Limited has the highest cash tax rate.

The reason for which cash tax rate is different from book tax amount
The main reason for the difference of cash tax amount and book tax amount is the adjustment of
changes in the deferred tax assets and changes in deferred tax liabilities. This adjustment is done
for calculating the cash tax amount and for this reason cash tax amount is different from the book
or effective tax amount.
Conclusion
As accounting is known as the language of the business, all the financial reports should be
presented in such a way that will reflect the true phenomenon of a business. Many kinds of
financial statements analysis are doing for making decision based on the financial statements.
Equity and liabilities, cash flow statement disclose various information about a business. Other
comprehensive income statement items have significant effect on the decision-making process
and evaluation of the performance of the company. Finally, taxation is another area where so
much importance should be given.
References