Corporate accounting course report

Document Type:Thesis

Subject Area:Accounting

Document 1

The information found in these statements is necessary for the shareholders and the government. The focus of this study is the financial statement analysis of Brookside Energy Limited and Bass Oil Limited for the year 2017. The review is essential since it will help in determining the income tax expense, the equity, and the tax liability of the corporations which are critical in determining the position of the firms within the energy industry and the country at large. The two firms are the leading companies in decentralization which provides energy products and services. The organizations also provide environmentally sustainable and cost-effective energy sources. The assets of the company include cash and its equivalents, and financial assets investments. For instance, Brookside through its Oklahoma Holdings, LLC subsidiary, invested in the US and focuses on energy start-up.

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So far, the company has established positive relationships with other firms in the oil and gas industry over the past one decade. This has been possible because Brookside focuses on the mid-continent area of the US. Overview of Bass Oil Limited Bass Oil Limited is a public listed company that deals with the production of petroleum products. This is followed by the analysis of the asset and liability of the deferred tax of the two companies in collaboration with their current after. Finally, the report described the reasons behind the differences in the tax expenses paid by the two organizations. Equity Elements of Brookside Energy Limited and Bass Oil Ltd Total Equity Based on the financial statement of both organizations, the total equity of Brookside and Bass for the year 2017 was made up of contributed equity (capital), accumulated gains or losses, and the reserves.

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Cooper,54) stated that accrued gains or losses could also refer to profits earned and retained by an organization. However, in some cases, businesses can face losses which have to be reported in the profit and loss accounts. The contributed equity of Bass limited as per the 2017 financial report was $ 35,120,847 while that of Brookside Energy was $ 222,355,544. They reflect the amount of equity of both companies that have been invested by the shareholders in exchange of stock. Accumulated Gain or Loss Accumulated gain or loss is another element of equity. They refer to the retained earnings of a firm which can either be positive or negative depending on the performance of a company during a particular financial year. The retained earnings are distributed among the shareholders as dividends in case a firm does not earn sufficient profits.

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This was a huge decline in the total capital. The equity of Brookside Energy in 2016 was $ 3,611,432, and in 2017, it increased to $4,682,484. In 2016, Bass Oil did not have any reported reserves. Brookside on the hand reported a reserve of $ 1,929,426 and $ 2,327,095 in 2016 and 2017 respectively. The Tax Expenses of Brookside Energy and Bass Oil Based on the 2017 annual report for Brookside Energy, there were no tax expenses done by the firm. It is also defined as an estimate of a company's performance. It is usually influenced by the investment decisions of the shareholders and the company itself. It takes into consideration the gains and losses that a company experiences. It is calculated as the difference between the revenues and the expenses incurred. Accounting income is commonly known as the net income. Moreover, they generate income in the future and reduce expenses.

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The current assets are made up of cash and its equivalents, and trade receivables. The non-current on the other hand includes other receivables and exploration. In 2017, the total assets of Brookside Energy were $ 7,605,269 while that of Bass Oil was $ 6,070,381. In accounting, any deferred tax on assets is created with the aim of making the company to pay higher income tax than the actual tax payable amount. Secondly, the rules and regulations of taxable income of a firm can dictate that any deferred tax asset be forwarded to the following accounting year. Businesses incur the deferred asset tax because it is regarded as a tax liability before it is removed from the income statement to the taxable income (Beekes et al. Based on the financial report of Bass Oil Ltd, the net deferred tax assets which were recognized was $ 50,594.

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Since the tax is unrecognized, they do not affect the financial position of the firm in the energy industry. During the same period, Brookside Energy Limited did not incur any deferred asset taxes. In the financial reports of both Bass Oil and Brookside Energy, there are no liabilities on deferred tax for the company failing to achieve their profit margins at the end of the 2017 accounting period. The Income or Current Tax of Bass Oil and Brookside Energy From the financial statements, it is clear that both Bass Oil and Brookside Energy Incurred losses in the 2017 financial year. Therefore, the current tax amount for both companies is nil. Thus, the taxing authority of the two firms analyzed will be unable to manage its operations. This is because they depend on the tax revenue to carry out their daily activities (Guan, 32).

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In 2017, Brookside made a loss of $ 1,095,551 before tax. In this case, the expenses related to tax are equal to zero. Therefore, if a firm earns profits, then they should pay tax. Differences in the Income Tax Paid by Bass Oil In the year 2017, the company Bass Oil Ltd made a loss of $ 1,727,572 before tax. This implies that the company is not subject to any tax related to expenses. The current assets of a company are essential for the short-term liquidity. The current assets of Bass Oil Ltd in 2016 were $475,425, and in 2017 they increased to $ 2,708,333. The current liabilities, on the other hand, were $ 131,145 and $ 2,746,541 in 2016 and 2017 respectively. The rate of increase in the liabilities is higher compared to the assets. In this case, it may be confusing that the company was operating in losses.

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However, it is essential to note that the companies incurred the two companies incurred huge expenses which led to the high losses. With time, it is expected that Brookside Energy and Bass Oil will regain its position in the energy industry by the end of the 2018 financial year. Works Cited Beekes, Wendy, Philip Brown, and Qiyu Zhang. Corporate governance and the informativeness of disclosures in A ustralia: a re‐examination. Accounting & Finance 55. The value relevance of deferred tax attributed to asset revaluations. Journal of Contemporary Accounting & Economics 10. Agrawal, Anup, and Tommy Cooper. Corporate governance consequences of accounting scandals: Evidence from top management, CFO and auditor turnover. Quarterly Journal of Finance 7.

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