The AGL Energy Ltd Company is Australian's most significant company that owns privately, operates, and develops energy from renewable assets, and it is the company that invested a substantial amount in the supplies of electricity and gas. The AGL is the largest Australian company which is generating electricity, and as well as the largest emitter of carbon. The AGL Company has a firm belief and also passionate about the progress, human and technology, and determination, which is relentless for you to make a better thing and even the economy of the Australian planet. Taxable profit can be explained as the profit from which income tax has yet to be paid. The taxable profit of different corporations might depend on the taxation authorities because the rules of the taxation authorities are different for various corporations. For example, sometimes the governments give some organization the status of nonprofit. It means that on the earnings of such corporation’s tax will not be deducted. A deferred tax asset is recognized for the elevating forward of unused tax losses to the extent of the existing taxable transient differences, of a terrific type, that reverse in a splendid period. The reversal of those taxable temporary variations enables the utilization of the unused tax losses and justifies the recognition of deferred tax assets. Consequently, future tax losses are now not considered. When tax laws restrict the extent to which unused tax losses can be recovered against future taxable.

Table of Contents

Executive summary. 2

Introduction. 4

Explanation of the concepts. 6

Accounting Profit 6

Taxable Profit 6

Temporary Difference. 6

Taxable Temporary Difference. 7

Deductible temporary difference. 7

Deferred Tax Assets. 7

Deferred Tax Liability. 7

The recognition criteria of deferred tax assets and deferred tax liability. 8

Firm’s Tax Expense in Latest Financial Statements. 9

Interesting, confusing, surprising facts about the treatment of tax in firm’s financial statements. 12

Conclusion. 13

References

Introduction of AGL Energy Limited Company

The AGL Energy ltd company operates to do assets in renewable energy. The AGL ltd company is based in Australia, and it is the largest company in Australia. The primary purpose of this company is to sell and purchase electricity and gas; it generates, constructs, and operates energy and power, which processes the infrastructure and develops the production facilities (annual reports, 2020).  AGL Energy Ltd is a company of Australia listed as the company publicly. This company is involved in producing or generating electricity and retaining electricity and gas for commercial and residential use. AGL Energy Ltd makes this energy by different sources, such as the power stations that use solar energy, storage of gasoline, gas seam coal, power of wind energy, control of thermal energy, hydro-electricity, and natural gas. Across Queensland, South Australia, Victoria, and New South Wales, the AGL limited in August 2017 claimed that there are more than 3.6 million accounts of residential and business accounts.  In July 2017, in Western Australia, the AGL Energy ltd entered in the commercial and residential market of gas. The AGL Energy Ltd company is Australian's most significant company that owns privately, operates, and develops energy from renewable assets, and it is the company that invested a substantial amount in the supplies of electricity and gas. The AGL is the largest Australian company which is generating electricity, and as well as the largest emitter of carbon. The AGL company has a firm belief and also passionate about the progress, human and technology, and determination, which is relentless for you to make a better thing and even the economy of the Australian planet. In this era, everyone knows that things are changing rapidly due to technology as well AGL company also knows. The AGL ltd don’t shy in giving answers to the questions which are tough to answer and asked by the clients. The AGL ltd investing renew infrastructures, modern ideas, and the partnerships and also expanding sources and products of the portfolio to make things more useable, affordable, sustainable, and reliable. For the living of Australians in a better way, the AGL ltd trying to innovate energy and other sources which are essential and helping the future generation around their company world for preserving. The company is based on employees from 10001 to 5000 (agl, 2020).

Explanation of the concepts of AGL Energy Limited Company
Accounting Profit of AGL Energy Limited Company

Accounting profit can be explained as the organization's total earnings. The accounting profit of the organization is evaluated on the basis of generally accepted accounting principles (GAAP). In the accounting profit, explicit costs are included which include depreciation, operating expenses, taxes, and interest. The accounting profit is utilized by the management of the corporation to evaluate the financial health of the organization. The accounting profit is different from economic profit because it only shows the monetary revenue that it gets and the monetary expenses which it pays. In short, the accounting profit is the amount that the organization receives after deducting explicit costs.

Taxable Profit of AGL Energy Limited Company

Taxable profit can be explained as the profit from which income tax has yet to be paid. The taxable profit of different corporations might depend on the taxation authorities because the rules of the taxation authorities are different for various corporations. For example, sometimes the governments give some organization the status of nonprofit. It means that on the earnings of such corporation’s tax will not be deducted. The taxable profit is usually the operating income however different taxable incomes include capital gains, dividend income, and interest income. On different taxable incomes, different tax rates are applied. On corporations, the corporate tax rate is applied.

Temporary Difference of AGL Energy Limited Company

The temporary difference can be explained as the difference between the amount of liability and asset that is mentioned in the balance sheet and the tax base. The temporary difference is usually of two types which include taxable temporary difference and deductible temporary difference. The temporary difference occurs because the amount of tax has yet to be deducted or paid. The difference is settled when the amount of the liability and asset is settled. When the temporary difference occurs in the corporation the expenses which the organization records in the financial statements include both current tax income/expense and deferred tax income/expense (Fridson & Alvarez, 2011).

Taxable Temporary Difference of AGL Energy Limited Company

The taxable temporary difference can be explained as the difference which causes taxable income of the period to be less than pretax income on which tax has yet to be paid. Therefore the income tax which has to be paid in the current period is less than accrual income tax. The difference between accrual income tax and income tax payable is known as deferred tax liability. When the temporary difference occurs in the corporation the expenses which the organization records in the financial statements include both current tax income/expense and deferred tax income/expense (Chandra, 2011).

Deductible temporary difference of AGL Energy Limited Company

The deductible temporary difference also occurs due to the difference in amount occurs in the financial statements. Sometimes the organization wants to claim the expenses in the tax returns. The tax authorities take time in recognizing the expenses and that is why difference occurs in the financial statements.

Deferred Tax Assets of AGL Energy Limited Company

The deferred tax assets are formed when the organization paid the amount of taxes or carry forward the amount. However, this amount is not recognized in the financial statement and that is why deferred tax is created. The tax authorities recognize the expenses and revenues in different time periods which becomes a major reason for deferred taxes. The differed taxes helps the corporation to decline its future tax liability. The accountants recorded the tax amount in the financial statements according to the principles of GAAP of international accounting standards. IAS (Warren, et al., 2016).

Deferred Tax Liability of AGL Energy Limited Company

The deferred tax liabilities are formed when the organization does not pay the amount of taxes or carry forward the amount. However, this amount is not recognized in the financial statement and that is why deferred tax is created. The tax authorities recognize the expenses and revenues in the different time periods which becomes a major reason for deferred taxes. The differed taxes helps the corporation to decline its future tax liability. The accountants recorded the tax amount in the financial statements according to the principles of GAAP of international accounting standards. IAS (Mulford & Comiskey, 2011).

The recognition criteria of deferred tax assets and deferred tax liability

A deferred tax asset is recognized for the elevating forward of unused tax losses to the extent of the existing taxable transient differences, of a terrific type, that reverse in a splendid period. The reversal of those taxable temporary variations enables the utilization of the unused tax losses and justifies the recognition of deferred tax assets. Consequently, future tax losses are now not considered. When tax laws restrict the extent to which unused tax losses can be recovered against future taxable profits in each year, the amount of deferred tax property recognized from unused tax losses as an end result of suitable present taxable transient variations is confined as targeted with the aid of the tax law. This is because when the appropriate taxable brief variations reverse, the amount of tax losses that can be utilized by that reversal is reduced as unique through the tax law. Also, in this case, future tax losses are not considered. in each case, if the unused tax losses exceed the amount of suitable present taxable temporary differences (after taking into account any restrictions), an additional deferred tax asset is known solely if the requirements in paragraphs 29 and 36 of IAS 12 are met (ie to the extent that it is probably that the entity will have suitable future taxable profit, or to the extent that tax planning opportunities are available to the entity that will create terrific taxable profit). (Mohana, 2011).

Firm’s Tax Expense in Latest Financial Statements

Source: Morningstar of AGL Energy Limited Company

Source: Morningstar

Interesting, confusing, surprising facts about the treatment of tax in the firm’s financial statements

There are many things that have been learned by analyzing the financial statements of the corporation. The financial statements of the corporation provide detailed information about the profitability, liquidity, asset management, and financial leverage of the organization. it is the duty of the financial managers to create financial statements in such a way that it provides accurate information to the management and the investors (Chandra, 2011).

The financial statements are analyzed by the mangers to tale various decisions. On the basis of financial statements, the managers invest in different projects or expand the current business. If the financial statements are not going to be prepared accurately than different problems’ can arise in the organization. The tax-related matters should be clearly mentioned in the financial statements so that the profitability of the company does not show the wrong information. The financial statements are not only analyzed by the management but also investors as well who wants to invest in the organization.

Conclusion of AGL Energy Limited Company

It is concluded that the taxable temporary difference can be explained as the difference which causes taxable income of the period to be less than pretax income on which tax has yet to be paid. Therefore the income tax which has to be paid in the current period is less than accrual income tax. The difference between accrual income tax and income tax payable is known as deferred tax liability. When the temporary difference occurs in the corporation the expenses which the organization records in the financial statements include both current tax income/expense and deferred tax income/expense. The financial statements are analyzed by the mangers to tale various decisions. On the basis of financial statements, the managers invest in different projects or expand the current business. If the financial statements are not going to be prepared accurately than different problems’ can arise in the organization. The tax-related matters should be clearly mentioned in the financial statements so that the profitability of the company does not show the wrong information. The financial statements are not only analyzed by the management but also investors as well who wants to invest in the organization. profits in each year, the amount of deferred tax property recognized from unused tax losses as an end result of suitable present taxable transient variations is confined as targeted with the aid of the tax law. This is because when the appropriate taxable brief variations reverse, the amount of tax losses that can be utilized by that reversal is reduced as unique through the tax law. Also, in this case, future tax losses are not considered.

References of AGL Energy Limited Company

agl, 2020. AGL. [Online]
Available at: https://www.agl.com.au/about-agl
[Accessed 31 05 2020].

annualreports, 2020. AnualReports.com. [Online]
Available at: http://www.annualreports.com/Company/agl-energy-limited
[Accessed 31 05 2020].

Chandra, P., 2011. Financial Management. s.l. Tata McGraw-Hill Education.

Fridson, M. S. & Alvarez, F., 2011. Financial Statement Analysis: A Practitioner's Guide. s.l.: John Wiley & Sons.

Mohana, R. P., 2011. Financial Statement Analysis and Reporting. s.l.: PHI Learning Pvt. Ltd.

Mulford, C. W. & Comiskey, E. E., 2011. The Financial Numbers Game: Detecting Creative Accounting Practices. s.l.: John Wiley & Sons.

Pandey, I., 2015. Financial Management. s.l. Vikas Publishing House.

Warren, C., Reeve, J. M. & Duchac, J., 2016. Financial & Managerial Accounting. s.l. Cengage Learning.