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This assignment helps to understand the concept of GST and CGT with their consequences. The GST can be termed as the goods and service tax, which is indirect and that, can be imposed on the supply of services and goods. If the parties registered under the laws of GST then they are bound to pay tax as per the terms and conditions. The capital gain tax is the tax on the revenue that can be realised from the sale of assets. It also ascertains the different methods for tax for different assets. It also includes certain transactions such as the sale of shares, land and piano and analyse its legal effect. 

Question 1


The city sky co. is the development Company and investment. The firm purchased the piece of land in Brisbane and plan to build the 15 apartment for sale. They also engage in lawyer services for development. 

Purchased land and plan to build the 15 apartments
Lawyer services that can be availed at $33000
Turnover of lawyer $300000 per year. 


It can be asserted that City Sky is a developing and investment company which sells the apartments. By developing these apartments they have to recognise whether these are taxable or not. It can be investigated that these are taxable sales. The credit of GST can be availed in the following circumstances, these are:

  • As per the section, 40-75 the premises should be new residential premises. 
  • Before the year 1998, the premises can’t be used for residential purpose. 
  • There should be some consideration. 
  • The premises should be established in Australia
  • For the transaction, the seller should be registered. 

By analysing the above rules, it can be stated that the firm is bound for the taxable sales and inputs of credit which was rendered from the premises.  


As per the Section 40-75, a New Tax system that is Goods and Services Tax Act 1999 was introduced. It consists of the price charged for the services and goods and credit should be claimed for the services which were bought for the business purpose. 

It is essential to register under the GST if the turnover is more than $75000 or $150000 or more in a non-profit organisation. It includes certain business such as the lending of money and provisions for fee credit, letting out the residential properties. It can also be observed that the “new” constructed premises should be let or sold out. If the firm purchases the new assets and sells the old assets to earn profits then in that situation, it is essential to register GST. But vice-versa, if this property is used for personal use and they did not earn any profit on this, then there is no GST. 

In case of residential properties, the sale will be raced input which means that the credits of GST cannot be claimed on the purchased items for sales as the existing properties are not bound for the GST (McClure and Govendir,  2016).  

The sale will be considered as the taxable sales, in case of new premises. The credits of GST will avail on the different purchase and sale will bound by the GST. 

There are certain premises which can be recognised as new if:

  • The premises has been developed or constructed after the innovation. 
  • The property should be new which means it should never be sold earlier. 
  • There should be the construction of a new building inland after demolishing the old one. 

There are certain conditions in which building can be new for the 5 years, they are:

  • The building can be used for residential purpose. 
  • It should be renovated properly.
  • The construction should be done after demolishing the old building. 

As per the provision of Australian tax, if any old and new premises are used for the commercial and residential purpose, then the sale will for both will be taxable. It states that they claim credits in the purchase items. It can also be observed that if the residential premises have been let out or sold then in that rent will be input tarred. This states that rent will not be considered under the GST(McClure, et. al., 2016).  

In addition to this, if a commercial estate has been sold out then there will be an occurrence of GST. In some transactions, it is necessary to register under GST such as buying and selling out property, leasing the commercial property etc.


From the above analyses, it can be stated that GST plays a crucial role in the business. There are certain transactions, which require the registration of GST such as buying and selling for the business purpose. If the business turnover exceeds the firm limit then, in that case, GST is necessary. 

Question 2: 


This question analyses the concept of Capital gain tax with their consequences. Capital gain is triggered in a case when assets are realised or sold. The total capital gains minus capital losses can be termed as the “net capital gains”. Capital gain is a tax assessed on the difference between the purchase price and sale price of an asset. It also records the several transactions in which the company apply the CGT. The firm is bound to charge a 50% tax on capital gains. As per the rules of Australia, the value of capital gain operates as the returns of tax in which assets can be sold or disposed of. 

Capitals Gain Tax 
Material facts on the problems
Sale of Block $100000
In the year 1991-


Legal Fees

Stamp duty




Interest on loan $32000
Bill on Unites $2200
Advertisement $25000
Legal fees on dispute $5000
Removal of pine trees  $27500


Sale of 1000 shares@50.85: 2% brokerage on sales, purchased @ rate $3.5 in the year 1982
In the year 2015, sale of stamp collection $60000, Auction fees $5000.
In the Year 2000, sale of piano $300000, purchase price $800000. 

Rules /law

As per the provisions of taxation law, it can be asserted that the CGT is levied to the firm at the rate of 30% on the value of Capital gain but if a person is an individual it would be similar to the tax rate. There are certain situations in capital gain tax can be applied these are discussed below:

  • Property of estate, but is exempted in residence of the applicant who files the tax return.
  • If the items such as Units, trusts, sale of shares and other instruments are created under the ordinary course of business then they will be exempted from CGT (Eccleston, 2013).
  • Lease, other improvements, the goodwill which is charged on assets that is land without selling it.  
  • The involvement of new methods and techniques of encryption of digital assets can be charged on the capital gain tax. 
  • The collectables, personal assets that have a certain amount and value which implies the rate of capital gain tax. 

Further to this, it can be observed that the assets such as home, car which are used for personal use are exempted under this. According to the provisions of Australia law, the collectables are excluded from the capital gain tax. It includes the gemstones, boats and vehicles. In addition to this, assets such as jewellery, Antique pieces, photos, and wines are considered collectables. 

Capital Gain in terms of shares

 It can be noted that Emma has carried out certain transactions which include the shares. It is the units that include the managed funds and recognised as the capital gains. While purchasing assets, the company can levy a certain amount of tax on it and that can be changed (Eccleston, 2013). 

In case of shares, it can be analysed that the firm receives the payment which is non-accessible and units are redeemed from one fund to other funds. 

Sale of Stamp,   the sale of the stamp comes under the category of collectables and that are exempted under Australian taxation. It also provides the different category on which tax can collect, such as if the value of collectables is less than the $ 500. Secondly, if an individual purchased collectables before the year 1995. The disposal stamp is on or after the year 1995. It also consists the postage stamps and that will also be considered in this category (ATO, 2019). 


It can be examined that the capital gain tax is the profit and that comes under the head of income. Capital does not apply to an innate estate and there is no concept of sale, there will be a transfer of ownership. As per the scenario, Emma developed certain transactions in the last preceding year that involves the amount of tax. 

Sale of land is the first and foremost transaction in which Emma wants to sell the land which was purchased by him(Mawuli, 2014). It shows the deductions and value of CGT can be followed properly. While doing this transaction, it also involves the other transaction such as legal fees, stamp duty etc. It does not recognise the cost of advertisement and the amount of interest is capitalised. 

Calculation of purchase price:

Cost of land $250000
Legal fees $10000
Stamp duty $5000
Legal fees $5000
Interest paid  $32000
Total cost $302000

The second transactions are related to the sale of shares in which Emma sold the shares and earn profit. The selling of shares is also recognised as the CGT. In this, the firm purchases the product in the year 1982 that includes certain units. It these acquired before 1985 then they are exempted from the rate of tax. But in this transaction, there is no such condition that arises before therefore tax is not chargeable on the shares(Tewari, 2018). 

The Emma also sell the shares in which auction fees are chargeable. In this, the value of collectables is not included in the category of Goods and sales tax. Sale of shares are exempted under the tax. 

Costing  $50000
Sale of consideration $60000
Auction fees $5000
Hence consideration will be $65000

Lastly, Emma sells the piano at the value of $30,000 which was bought at the $80,000 in the year 2000. This will not be treated as the capital gain tax as it is the personal assets and not used by the owner in a business. Therefore, it can be observed that the services and goods which are used as the business purpose will not be charged under the capital gain tax(ATO, 2019). 


From the above observation, it can be analysed that Emma involves different transaction in different years to calculate the amount of capital gain tax. In addition to this, there are some transactions on which capital gain tax are not levied. It can be stated that if the firm uses the assets for more than 12 months then the person can decrease the value up to 50% and that amount will not be held by the company. 


It can be concluded that the company city sky is liable to pay the amount of tax which is rendered from the lawyer. They also state that the amount of GST that is $330000 for the services of a lawyer can be treated as the credit and included in the liabilities. In the second situation, Emma is bound to pay the amount of tax on land.  They are not bound to pay the tax on shares as they have been acquired before the due date. Piano can be recognised as the personal assets and hence they are not taxable. 

  • ATO, 2019. Australian Taxation Office [Online] ATO. Available at:[Accessed on: 18 September 2019].
  • Dixon, J. and Nassios, J., 2018. The effectiveness of investment stimulus policies in Australia. Centre of Policy Studies, Victoria University.
  • Eccleston, R., 2013. The tax reform agenda in Australia. Australian Journal of Public Administration, 72(2), pp.103-113.
  • Mawuli, A., 2014.  Goods and services tax: An appraisal. In Paper presented at the PNG Taxation Research and Review Symposium (Vol. 29, p. 30).
  • McClure, R., Lanis, R. and Govendir, B., 2016. Analysis of tax avoidance strategies of top foreign multinationals operating in Australia: An expose.
  • Tewari, V.K., 2018. Goods and Service Tax. GST Simplified Tax System: Challenges and Remedies1(1), pp.173-176.

Executive summary

In this assignment, the report has been prepared according to the case study of Adam and co. In this report the main focus is on the expenditure cycle to evaluate the processes, risk and internal control in the expenditure cycle. The expenditure cycle includes the purchase system, cash disbursement system and the payroll system. The assignment also includes the flowchart for each and every process of expenditure cycle. The flowcharts that have been prepared in this report are system flowchart of purchase system, system flowchart of cash disbursement system, system flowchart of payroll system. The internal control weakness of each system has been identified and it also includes the risk that the company may face because of such weakness in the internal control system. Therefore, it can be said that the report includes detail about the expenditure cycle of the company and weakness in the internal control procedure that can hinder the work in the future course of action.


In this assignment the case study of Adam & co. is given and analysis of the expenditure cycle of the company has been made so that the internal control system of the company can be studied. The case study is of the industrial supplier. The company purchases its inventory from manufacturers in China and Thailand. The company has a centralized accounting system. The expenditure cycle of the company includes purchase system, cash disbursement system and payroll system. The expenditure cycle is a set of actions taken for purchasing the goods in the company. It is the repetitive process of creating the purchase and then ordering the goods. The complete analysis of company’s expenditure cycle has been done so that the internal control weakness, risk, and process can be identified by the managing director so that the necessary actions can be taken to improve the process and system.

1. System flow chart of purchase system

System flow chart of purchase system


2. System flow chart of cash disbursement system

System flow chart of cash disbursement system

3. System Flow chart of payroll system

System Flow chart of payroll system


Internal control weakness in each system and risk associated with the identified weakness

The internal control weakness in each system and the risk associated with each system are:

Purchase system

In the purchase system the weakness that can be seen in the internal control procedure of the company is that it does not appear that the current inventories held with the company are checked before placing the orders (Skaife et. al.,  2013). It is not clear in the system what procedure is followed by the clerk to selectthe vendor and ordering the goods. The clerk should obtain quotes from vendors in terms of price, delivery date, and quality. These quotes should be then checked by the senior official and then the order should be placed. The entries of the clerk are not cross-checked which may result in the errors that may be deliberate or otherwise may get unnoticed by clerk. The risk that may result because of this weakness isnon-prior checking of the inventories may result in creating a pool of inventories that may not be required by the company (Cheng et. al., 2013). The entries are not checked again which may result in the wrong calculation of the net profit of company.

Cash disbursement system

In the cash disbursement system, the weakness that can be seen in the internal control system is that there is no segregation of duty all the financial transactions are been handled by on person that is the cash disbursement clerk. No proper system of processing of disbursement has been defined in the system. these all the weakness in the internal control system may result in huge loss to the company because cash is the most important element for every organization (Mohamud, 2013). The risk associated with this weakness is that non-segregation of duty may result in balancing the cash at the end of the accounting period.

Payroll system

In the payroll system, the risk that can be identified is that there is no proper employee handbook that clearly states the proper procedure for clocking in and clocking out and problems that may occur because of the wrong entry of the payroll information. The risk that is associated with this is that confusion may be created for the employee’s records (Vona, 2012).


Through this report, it can be concluded that expenditure process of the company includes various internal control weaknesses. This needs to be looked by the managing director so that the work is done smoothly and without errors. The internal control weakness in the expenditure system may result in occurrence of the various risk. The risk that may result because of this weakness is thatnon-prior checking of the inventories may result in creating a pool of inventories that may not be required by the company. The assignment also includes the flowchart for each and every process of expenditure cycle. The flowcharts that have been prepared in this report are system flowchart of purchase system, system flowchart of cash disbursement system, system flowchart of payroll system. Therefore, it can be said that complete details of the expenditure process of Adam & co.  Has been analyzed in this assignment.

  • Alvarez, D.R. and Shapiro, M.A., Nexxo Financial Corp, 2012. Systems and methods for money sharing. U.S. Patent 8,204,829.
  • Blowers, A.J., 2013. Method for providing a web-based payroll and payroll related software as a service. U.S. Patent 8,494,927.
  • Cheng, M., Dhaliwal, D. and Zhang, Y., 2013. Does investment efficiency improve after the disclosure of material weaknesses in internal control over financial reporting? Journal of Accounting and Economics56(1), pp.1-18.
  • Grendel, A. and Welter, M., SAP SE, 2013. Method for allocation of budget to order periods and delivery periods in a purchase order system. U.S. Patent 8,423,428.
  • Mahajan, K., Shukla, S. and Soni, N., 2015. A Review of Computerized Payroll System. University of Lingaya, Department of Computer Science.
  • Maravas, A. and Pantouvakis, J.P., 2012. Project cash flow analysis in the presence of uncertainty in activity duration and cost. International journal of project management30(3), pp.374-384.
  • Mohamud, H.A., 2013. Internal auditing practices and internal control system in Somali Remittance Firms. International journal of business and Social science4(4).
  • Schmitt, B., SAP SE, 2014. Managing consistent interfaces for business objects across heterogeneous systems. U.S. Patent 8,799,115.
  • Skaife, H.A., Veenman, D. and Wangerin, D., 2013. Internal control over financial reporting and managerial rent extraction: Evidence from the profitability of insider trading. Journal of Accounting and Economics55(1), pp.91-110.
  • Vona, L.W., 2012. Fraud risk assessment: building a fraud audit program. John Wiley & Sons.


Fortescue Metals Group Ltd (FMG) is an iron ore company situated mainly in Australia. It was founded in the year 2003. The company comes under the industry of Metals and Mining. Its headquarters is placed in Perth, Western Australia. Fortescue Metals Group Ltd (FMG) deals in Iron ore, Steel, Gold, Copper and Lithium. It is one of the largest iron ore producers. Mainly fourth largest producer of iron ore in wide world. Elizabeth Gaines works as a (CEO) in the Fortescue Metals Group Ltd and Andrew Forrest being a (Chairman) combines to become the major shareholder in the company. The Fortescue Metals Group Ltd has many subsidiaries work under it. The mine company holds 87000 km2 area. The location where it is situated is Christmas Creek Mine, Pilbara region, West Australia. The company is listed company on the ASX Australia stock exchange with all well known companies. Fortescue Metals Group Ltd (FMG) has grown fastest heavy haul railways, advanced infrastructure and Fortescue company has its own iron ore carriers as well. Fortescue Metals Group Ltd is building a new succes story in the field of mining. Safety, values and empowerment of people are the basic goals, this Australian company holds. 

I. Introduction : 

The company selected is the fourth largest iron ore producer Fortescue Metals Group Ltd (FMG). The main purpose of my assignment is to research thoroughly through the Fortescue Metals Group Ltd. This purpose is carried so that we can learn about the success policies, financial performance and income statements of the above mentioned company. In this assignment, we will examine the main issues, underlying theories, performance measures used and the firm’s financial performance. We will get to know the capital structure, price earning ratios, non current assets and income statement. 

The  analyse of  Fortescue Metals Group Ltd trends in the last three years. The company’s performance analysis and success report. The company’s philosophies and methodologies about future.


The companies financial ratios show many ups and downs from the last two to three years. The annual reports has been taken from the Fortescue Metals Group Ltd (FMG) official website The annual reports will show the progressive approach company took and the successful strategies taken. The assignment has been structured strictly as per the norms and guidelines suggested and the assigned tasks. 

This assignment consists the real figures as per the Fortescue Metals Group Ltd website. The referred materials are latest and updated in the year 2019. The assignment consists of many useful information about the success, ups and downs, weaknesses and strengths. Here we will find out the details about the position and liquidity of Fortescue Metals Group Ltd. The share prices are checked on

Financial analysis of fortescue metals group ltd. :

II. Financial Analysis of Selected Company  

2.1 The Fortescue Metals Group Ltd company deals in mine industry mainly iron ore –

The Fortescue Metals Group Ltd company deals in Steel, Gold, Copper and Lithium but mainly iron ore. It offers the iron ore to world wide. The importance of the mining in maintaining the comparative advantages of the company can be listed below –

  • Trained workers
  • Flexible arrangements of work
  • Staff incentives plan
  • 16 – weeks paid parental leave etc
  • Huge Mining sites
  • Full check on the safety measures for any miss happenings occur at the time of work.
  • Highly automated plants and machinery

All the other personal as well as professional benefits the Fortescue Metals Group Ltd provide to their staff and workers (Babalola & Abiola, 2013). 

2.2 Calculation and analysis of performance of Fortescue Metals Group Ltd by liquidity ratios –

According to the data collected from THE WALL STREET JOURNAL, the financial data obtained from current financial statements of Fortescue Metals Group Ltd for the past 3 years we will calculate the liquidity ratios know about the capital structure (Fortescue metals group ltd., 2019).

Metals Group Ltd by liquidity ratios


S.No,   Particulars 2016—17   2017-18   2018-19  
1 Current              
    Current Assets $    222,331.00  2.172304295 $    470,047.00  2.930668562 626006 3.047904221
    Current Liabilities $    102,348.00  $    160,389.00  205389  
2 Quick              
    Cash + Accts. Rec. $    193,894.00  1.894458123 $    405,946.00  2.531008984 517553 2.519867179
    Current Liabilities $    102,348.00  $    160,389.00  205389  
3 Debt-to-Worth              
    Total Liabilities $    102,448.00  0.424246942 $    166,869.00  0.300281262 205616 0.260982365
    Net Worth $    241,482.00  $    555,709.00  787854  
INCOME STATEMENT RATIOS: Profitability (Earning Power)                
4 Gross Margin              
    Gross Profit $    151,006.00  0.274932772 $    464,349.00  0.503439027 713752 0.53251722
    Sales $    549,247.00  $    922,354.00  1340336  
5 Net Margin              
    Net Profit Before Tax $      52,299.00  0.095219455 $    415,711.00  0.450706562 283232 0.211314178
    Sales $    549,247.00  $    922,354.00  1340336  
ASSET MANAGEMENT RATIOS: Overall Efficiency Ratios                
6 Sales-to-Assets              
    Sales $    549,247.00  1.596973221 $    922,354.00  1.276476726 1340336 1.349145923
    Total Assets $    343,930.00  $    722,578.00  993470  
7 Return on Assets              
    Net Profit Before Tax $      52,299.00  0.15206292 $    415,711.00  0.575316436 283232 0.285093662
    Total Assets $    343,930.00  $    722,578.00  993470  
8 Return on Investment              
    Net Profit Before Tax $      52,299.00  0.15206292 $    415,711.00  0.575316436 283232 0.285093662
    Net Worth $    343,930.00  $    722,578.00  993470  
ASSET MANAGEMENT RATIOS: Working Capital Cycle Ratios                
9 Inventory Turnover              
    Cost of Goods Sold $ (285,729.00) -10.04778985 $ (458,005.00) -7.145052339 -590584 -5.4455294
    Inventory $      28,437.00  $      64,101.00  108453  
10 Inventory Turn-Days              
    360                     360  0.012659563                     360  0.005616137 360 0.00331941
    Inventory Turnover $      28,437.00  $      64,101.00  108453  
11 Accounts Receivable Turnover              
    Sales $    549,247.00  7.536940473 $    922,354.00  14.08367562 1340336 25.41017669
    Accounts Receivable $      72,874.00  $      65,491.00  52748  



  • the current ratio has increased . This means the Fortescue Metals Group Ltd company is able to meet the short term liabilities successfully over the time. There is an increasing trend in the ratios.
  • According to the above calculation, it is clear that with the increase in quick ratio Fortescue company can easily pay back its current liabilities. In 2018 the quick ratio was less than 1, this means company was not able to pay back the current liability.
  • There is a certain growth in the cash ratio from the year 2017 to year 2019. But these ratios are less than 1. A ratio above 1 means that, the company can easily pay off its current liabilities with the cash and cash equivalent. Here the company have cash ratio less than 1 in all the years.
  • According to the above scenario, the Debt Equity Ratio is changing but very minutely. The low Debt Equity Ratio indicates less of borrowed funds and more of owner funds in the company. So here it is a good sign. There is a decreasing trend in the Debt Equity Ratio in passing years (Blum & Dacorogna, 2014).
  • As we can see there is a slight decline in the Debt to Total Asset Ratio in all the three years. This can be interpreted as the percentage of assets is funded through borrowing funds as compared with the percentage of principal resources that are funded by investors.
  • As we can see from the above proprietary ratios in percentage. here. When proprietary ratios is high that means the company is financially strong. Here it seems the company is dependent on debts in 2017 and 2019. The trend is not regular (Fortescue metals group ltd., 2019).
  • Above are the position of liquidity, solvency and trends analysis according to the important accounting ratios of Fortescue Metals Group Ltd.

2.3 Non-current Asset Analysis –

Non Current Assets are Fixed Assets such as Property, Plant, Equipment, Land & Building, Long-term Investment in Bonds and Stocks, Goodwill, Patents, Trademark etc.

Carrying Amount beg. of the year 2016-17 2017-18 2018-19
Plant and equipment 11456 11156 10995
Land and buildings 849 796 744
Exploration and evaluation 772 813 857
Assets under development 227 291 301
Development 3563 3437 3292
Plant and equipment 4521 5478 6464
Land and buildings 257 316 412
Exploration and evaluation 0 0 0
Assets under development 0 0 0
Development 1052 1259 1448
Carrying Amount end of the year
Plant and equipment 11156 10995 10690
Land and buildings 796 744 650
Exploration and evaluation 813 857 539
Assets under development 291 301 889
Development 3437 3292 3303

Here, in the year 2019 the amount of non-current assets has increased as compared to the last two years that is 2018 and 2017. This increase means the Fortescue Metals Group Ltd company can turn their assets in to cash within 1 year as per the date mentioned in companies balance sheet (Fortescue metals group ltd., 2019).

2.4 The scenario analysis as per the information given –

Averag Price $25 
Units to be sold 450000
Life 4 years
Equipmnet Cost $2,500,000 
Residual Value $500,000 
Working Cpaital $800,000 
Variable Cost $15   
NPV Current Case
Years 0 1 2 3 4
Equipmet Cost 2500000        
Sales   11250000 11250000 11250000 11250000
Working Capital   $800,000  800000 800000 800000
Variable Cost   6750000 6750000 6750000 6750000
Residaul Value         $500,000 
Cash Fixed Cost   450000 450000 450000 $450,000 
Profit Before Tax   $3,250,000  $3,250,000  $3,250,000  $3,250,000 
Tax   975000 975000 975000 975000
Profit after Tax   $2,275,000  $2,275,000  $2,275,000  $2,275,000 
Discounted Values 1 0.89285714 0.79719 0.71178 0.63552
Discounted Cash Flow 2500000 $2,031,250  $1,813,616  $1,619,300  $1,445,804 
Outflow 2500000
Inflow 6909969.76
Net Present Value 4409969.76


Averag Price $20 
Units to be sold 360000
Life 4 years
Equipmnet Cost $2,500,000 
Residual Value $500,000 
Working Cpaital $800,000 
Variable Cost $18   
NPV Worst Case
Years 0 1 2 3 4
Equipmet Cost 2500000        
Sales   7200000 7200000 7200000 7200000
Working Capital   $800,000  800000 800000 800000
Variable Cost   6480000 6480000 6480000 6480000
Residaul Value         $500,000 
Cash Fixed Cost   550000 550000 550000 $550,000 
Profit Before Tax   ($630,000) ($630,000) ($630,000) ($630,000)
Tax   -189000 -189000 -189000 -189000
Profit after Tax   ($441,000) ($441,000) ($441,000) ($441,000)
Discounted Values 1 0.892857143 0.79719 0.71178 0.63552
Discounted Cash Flow 2500000 ($393,750) ($351,563) ($313,895) ($280,263)
Outflow 2500000
Inflow -1339471.06
Net Present Value -3839471.06
NPV Best Case
Years 0 1 2 3 4
Equipmet Cost 2500000        
Sales   16200000 16200000 16200000 16200000
Working Capital   $800,000  800000 800000 800000
Variable Cost   6480000 6480000 6480000 6480000
Residaul Value         $500,000 
Cash Fixed Cost   350000 350000 350000 $350,000 
Profit Before Tax   $8,570,000  $8,570,000  $8,570,000  $8,570,000 
Tax   2571000 2571000 2571000 2571000
Profit after Tax   $5,999,000  $5,999,000  $5,999,000  $5,999,000 
Discounted Values 1 0.892857143 0.79719 0.71178 0.63552
Discounted Cash Flow 2500000 $5,356,250  $4,782,366  $4,269,970  $3,812,473 
Outflow 2500000
Inflow 18221058.73
Net Present Value 15721058.73

Interpretation on the sensitivity

Selling price : 9055951 = .19


Variable Price = 9055951 = .44


Fixed Cost = 9055951 = 6.63



2.5 The latest share or bond issuance by the fortescue metals group ltd 

The Fortescue Metals Group has issued coupon bonds recently. FMG Resources AUG 2006 is the issuer. The company has issued bonds in the form of Registered documentary bonds. It was an open subscription. It is an international bonds (Dorina, et. al., 2012).

The Company has been listing in Australia stock exchange as Fortescue FMG.

2.6 Calculation of the pe ratios and share price movement of the fortescue metals group ltd –

Price earning ratio has been declined to 46% last year in 2018. Up to the year 2019, the price earning ratio has gone up to 40%. The Operating income of the company is A$2.477 Billion in the year 2018 and the Net income results in A$1.134 billion in the year 2018 (Fortescue metals group ltd., 2019).

Price Earning Ratios = Market price / Earning per share
                          2019 2018 2017
Net income              4456 1,134 2,775
Earning pae share        1.44 0.36 0.89

The present PE ratio of Fortescue Metals Group ltd is 22.5%. If the pe ratio is high, the company is a growth firm and vice versa (Babalola & Abiola, 2013).

The last recorded price of share of FMG was marked at 8.950. The share price movement is watched out as 0.185 2.11% .

Recommendation Letter – 

As company took a comprehensive examination and analysed the firm’s financial performance from the updated financial statements of the Fortescue Metals Group Ltd. Being an investment analyst, I would recommend the investor to invest in Fortescue Metals Group Ltd. This company is performing well in the year 2019 and can write many success stories in the upcoming years. The share price fluctuations are not high or low. The investors can gain good returns from Fortescue Metals Group Ltd in near future.


The assignment is done with the fortescue metals group ltd .The company profit statement has been studied to find out the ratios of the company. This is finding that the company had making profits or not. The research will be useful to the shareholders to find whether to invest in the company or not. Thaw Company had made a successful issue of shares whose report had been summarised above. The ratios are done to better understanding of the report. All the current ration and the liquidity ratio are check to find the company had made profits in current year or not. The written down method of depreciation had been followed by the company. The life of the assets and the scarp value is as per the market value and as per the recommendation of law. The calculation of NPV is done to find pout whiter the project should be adopted or not. The company had made all the conclusion of worst and nest case and the sensitivity is done to find out which variable are more sensitive than others. 


Babalola, Y. A., & Abiola, F. R. (2013). Financial ratio analysis of firms: A tool for decision making. International journal of management sciences1(4), 132-137.

Blum, P., & Dacorogna, M. (2014). DFADynamic Financial Analysis. Wiley StatsRef: Statistics Reference Online.

Christensen, T., Cottrell, D., & Baker, R. (2013). Advanced financial accounting. McGraw-Hill.

Dorina, P., Victoria, B., & Diana, B. (2012). Aspects of company performance analysis based on relevant financial information and nonfinancial information. The Annals of the University of Oradea, 956.

Fortescue metals group ltd. (2019). About us. [Online] Fortescue metals group ltd. Available at [Accessed on 10.09.2019]

Fortescue metals group ltd. (2019). About us. [Online] Fortescue metals group ltd. Available at [Accessed on 10.09.2019]

Fortescue metals group ltd. (2019). About us. [Online] Fortescue metals group ltd. Available at [Accessed on 10.09.2019]


This report helps to understand the concept of Capital gain and capital allowance. Capital gain can be defined as the increase in the value of estate or capital assets that provide the high rate as compare to the price of purchase. Capital allowance is the value that can be spend on the assets of business and claimed against the taxable gain. It also analyse the concept of Capital gain tax (CGT) and their consequences on the sales. Apart from this it also calculates different costs of the assets. 

Question 1

 Advise jasmine of the CGT consequences of the above sales. Include relevant legislative references to support the answer.

  • According to the Australian tax laws,   the main residence (home) is exempted from the capital gain tax. To get this exemption, it can be stated that the individual should resides in that particular   property. As per the law, the empty property is not allowed for the exemption. It can be noted that if the person is living in the property but they are not the resident of Australia then in that situation they are not included under the main residence. There are certain  situation in which dwellings can be considered as the main residence such as:
  • The Personal belongings of the person are in it.
  • The person and his family live in it. 
  • The address on which mail can be delivered. 
  • The address on the electoral roll. 
  • The services such as power and gas associated to house.

According to the Australian tax, the assets acquired before 20th September, 1985 in Australia is not included in the capital tax. So, it can be concluded that the jasmine’s home is purchased before the 1985 and it comes under the main residence. By observing both rules, it can be analysed that the main residence of jasmine’s does not comes under the ambit of capital gain tax and she is not bound to pay the tax on sale of his home (Kenny, 2012). 

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  • According to the Australian tax law, motor vehicle and cars are exempted from the capital gain tax. As per the law, car can be exempted when it carry the passengers which are less in number that can be less than nine. This type of exemption can be applied to the private owner of the vehicle. It can be asserted that motor cars are exempted from the capital gain tax (ATO, 2019). There are certain cars which are not covered under the exemption , such as :
  • Racing cars
  • Taxi cabs
  • Scooter or motorcycle
  • Single seat sports car
  • Van and other commercial vehicle 

Therefore, it can be stated that jasmine sell the car and that can be exempted from the capital gain tax. In addition to this, the car of jasmine carries the less number of passengers and can be used for private purpose. Therefore, jasmine is not bound to pay the tax for the sale of car and she will neither gain nor loss anything. 

  • By observing the scenario, it can be asserted that jasmine is selling the small cleaning business that consist the business equipments and goodwill. According to the Australian taxation law, the sale of business includes the tangible and intangible assets. Tangible assets can be in form of inventory and machine. In tangible can be in form of trade name and goodwill. The capital loss and capital gain can be recorded in the income tax return and on that tax can be paid by person. Bu analysing this situation, it can be noted that the cost of acquisition is higher than the cost of sales as jasmine sold the equipments at less price. Therefore, it can be said that the jasmine suffers the capital loss (Kenny, 2012)
  • It can be asserted that exemption comprises of the personal items that have been acquired for less than $10,000. Personal use items are those items that cannot be used for the business purpose; they can be used for the enjoyment or for personal use. According to the Australian tax laws, the assets which are below the value of $10,000 are not included under the ambit of CGT. It includes the assets such as furniture, boats, electrical goods and different items of household. If the value of assets can be sold for  less than $10,000 then the person can be get exempted and the assets can be disposed. Therefore, it can be stated that the furniture sold by the jasmine does not included under the CGT (James, 2012).
  • According to the Australian tax laws, the collectables consists those items that can be used for the personal purpose or for the enjoyment. It includes the antiques, jewellery, rare folios, coins and medallions etc. According to the rules of taxation, the collectable items have the value less the $5000 and that can be exempted under the capital gain tax. By analysing the scenario, it can be noted that jasmine acquired the painting worth $500; therefore no tax can be paid on the sale of paintings. But if she purchase a painting directly from the artist for the value of $1000 which mean that value of painting does not comes under the exemption as the value of painting is more than $500. Therefore there will be a capital gain on the sale of painting as jasmine purchased directly from the artist (Konvisarova, et. al., 2015). 


Question 2


In the given scenario, there are certain expenses that can be incurred towards the purchase of machine and that expenditures are related to the acquisition of CNC machine. It can be stated that the john visit the Germany and the main purpose of john to visit the Germany is to inspect the machineries. For this, he spends certain costs such as visiting cost that is $12000, installation cost etc. It also consists the cost of guiding rod and that will not be-treated as the part of assets (ATO, 2019). It also asserted the amount of depreciation and that becomes the liability on the person. The value of depreciation can be levied from the date of use of machinery or from other means (Ang, 2014). 

Law and Application

According to the provisions of ATO, only those expenses form the part of cost which is necessary for the functioning of the product. In other words, all those expenditures which are relevant to form the assets and help them in their working As per the facts of the case, the value of CNC is $300000 and that will be recognised as the first cost. This value includes the cost which can be incurred or paid after 30 June 2005 and related to the assets. The other cost is installation cost that incurs the value of $25000 and that also comes under the ambit of assets. This type of assets starts depreciating when the firms begin to hold the value of asset. 

In the case of MUNNERY v FC of T, Administrative Appeals Tribunal of Australia, 23 March 2012, the concept of cost is elaborated. In this the firm purchased the assets that are machine and they did not include the amount of installation. They also spend the amount for the purchase of assets and that can be recognised as the capital allowance. This type of allowance is helpful for paying the amount of tax and to track the rate of depreciation. These are non- recurring and long term in nature. 

In addition to this, the second type of cost does not covered under the purview of first cost. It is that amount which can be paid after the installing and purchasing the assets of firm. These type of cost helps to maintain the standard and quality of assets and termed as the second type of cost. It also cost the different cost such as cost of destroying, maintenance and repairs, commission, advertisement and brokerage etc (Evans et. al., 2015). 

According to the given scenario, the cost of guiding rod i$5000 includes in the expenses as it makes the programming faster and that leads to the effective system. It also includes the cost of travelling as it directly related to the value of assets. There are certain expenses which do not comes under the ambit of cost that is amount of tax. The expenses which are capital in nature and the deductible amount are not the part of cost. 

Further, it can be stated that the machinery is imported in the month of November from Germany and installed in the month of January. So here the question arises regarding the date of starting and for the declining the asset value. 

It can be analysed that the time limit for holding the machine for the valuation of depreciation can be treated as the assets and that can be used for the purpose of installation. Company also allowed the deduction in case of taxable amount and they also allowed the deduction when the amount is taxable and not amount to depreciate the company assets (James, 2012). 

There are different types of expenditures that can be acquired by john for the installation of machinery. It is necessary to classify the expenses so that total amount of cast of capital assets can be reached. The main reason behind these classifications is the deductions that can be claimed against the expenditures which are necessary to create the product in running conditions.  

Further to this, the company use the declining value as expenditure and that can be deducted from the value. If the person uses the assets for their own purpose then in that situation the tax is deductible. But on the other side if the asset can be used for the business purpose then in that case it is not deductible (Evans et. al., 2015). The company use the assets for different purposes; they can use for their own purpose and second for the office use. In this situation the tax can be levied when the assets can be used for the purpose of business. 

In addition to this, the amount of machinery will be $33700 and on that value depreciation can be calculated, but if there is any generation in the value then in that situation depreciation can be charged on that additional amount. As per the rules, deductions can be allowed for the purpose of depreciation. 


From the above description, it can be analysed that capital gain and capital allowance plays a vital role in the company. Capital gain can be for short and long term and that can be claimed on the income taxes. The assets determine the partial and full value and that can be claimed in the year. It also determines the amount of depreciation and that can be based on the value of assets. Apart from this, it can be stated that the cost can be fragmented in to two portions; the first portion is the direct cost that consist of labour cost and direct expenditure. The indirect cost includes the indirect expenses. The depreciation can be calculated according to the different methods that are through the diminishing or the prime cost. They have different method and that helps the organisation to specify the actual amount of assets. 

    • Ang, A., 2014. Asset management: A systematic approach to factor investing. Oxford University Press
    • ATO. 2019. Capital gains tax. [online] Available at: [Accessed on: 12th September  2019].
    • Evans, C., Minas, J. and Lim, Y., 2015. Taxing personal capital gains in Australia: An alternative way forward. Austl. Tax F.30, p.735.
    • James, S., 2012. Australian Tax Research Foundation. In A Dictionary of Taxation, Second Edition. Edward Elgar Publishing Limited.
    • Kenny, P., 2012. Post Implementation Reviews of Recent Australian Tax Reform. J. Australasian Tax Tchrs. Ass’n7, p.79.
  • Konvisarova, E., Samsonova, I. and Vorozhbit, O., 2015. The nature and problems of tax administration in the Russian federation. Mediterranean Journal of Social Sciences6(5 S3), p.78.



In this report evaluation of two websites given will be done which are 1., 2.

According to the principles of Human Computer Interface (HCI), Objectives of this report is to evaluate the functioning of these websites with principles such as ease of interaction between human and computer (website), whether there is simplicity in structuring of tasks, are functions clearly visible, whether mappings of website are correct, whether it is aesthetically pleasing when browsing the website’s, whether errors are meaningful, whether there is enough documentation, is it flexible to use for extended amount of time etc. finding of all good and bad aspects of websites, what all can be improved and added, comparisons of both websites regarding their usability according to HCI design and evaluation principles.



DECIBULLZ: It is a website for hearing related products like headphones, hearing protection with multiple hyper suggesting products from shooting sound protection to manufacturing sound protection applications.

BOATING CAMPING FISHING (BCF): Abbreviated BCF it is a website for boating, camping and fishing needs for all the people looking for adventure from kayaks, boats, sleeping bags to fishing rods to even providing caravans and clothing providing all outing needs.

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DECIBULLZ: Homepage of DECIBULLZ is a very clean and direct to the point with leaving very for the imagination, with clear and full-size images covering nearly all the websites real estate describing its products, its design is rather pleasing to the eye making it easier to navigate. It has main tabs/hyperlinks which are hearing protection, headphones, explore and support where hearing protection has a clear dropdown menu which contains links to earplugs, percussive filer and other, coming to 2nd dropdown of headphones which contains wireless Bluetooth earphones to its accessories, 3rd dropdown menu being explore contains prescribed categories of fitness, shooting sports, manufacturing, music which is really nice touch bringing users directly to their needs and categorizing main products, when it comes to the 4th menu it is really a simplistic menu where instruction, support portal, my account and contact us reside, apart from dropdown menus there are plenty enough functionalities given in the header like search, gift cards, my account and shopping cart, body of this website includes clear and large images of its products with description of what products features are, complying with the HCI principles, at the end of the website’s body there is a box with an insert for email address to subscribe for newsletter, bottom of that are links to all the social media handles of the company like Instagram, Facebook etc. with its store locator, after that there is the footer of this website which includes all the useful links from its product to customer service and company (details), this website remains well thought out and easy to access with it making the buying of product from looking to checkout rather easy, navigation of this is also very intuitive, one doesn’t have to think much in order to navigate this website.

BOATING CAMPING FISHING (BCF): Homepage of BCF is rather cluttered because of its wholesome offerings it can prove to be hard to navigate where to find the product of need it can take time, it even has so many offerings that it can become confusing for the user on deciding what to checkout with, header of this website includes seven dropdown menus which can little too much with its header also containing other links like sale and gift ideas, with dropdown menus like boating, camping, fishing and others it provides a great variety of products, one going to a trip for any of these adventures probably won’t miss any of the products needed from this website with boating menu providing all the boating needs, camping providing all the camping needs till brands menu where products are categorized by its brand names, with links like sale, gift ideas and be a BCFing expert it also provides opportunities to work for BCF, with all these links and menus there is not much left to discover but it also is a problem because one can consume much time trying to find his/her product needs but can be solved with search option given on the header, coming to the body of this website it contains clear images but with product direct product showcasing it can be further cluttering where one can keep looking at products and not find suitable product, going to the footer it seems like a clear design directly referring to links, it is a website providing plentiful but with a major drawback of cluttering UI trying to do too much.


Predictability: both being e-commerce websites predictability is the topmost requirement, both of these websites prove to be predictable with DECIBULLZ being the more predictable one with its clear and direct to point dropdown menus leaving very less to figuring out, with BCF being a multi category product line e-commerce website it still remains relatively predictable but with its exceeding product line it can become hard to predict after a certain point.

Familiarity: both of the websites remain familiar with similar design contacts with any e-commerce website, BCF and DECIBULLZ both have familiar interface where header has dropdown menus relating to its products, on the left side being the logos of both websites on the right being functional links/buttons towards search, my account and shopping cart, with there bodies including images of their products with its features, with its footer including all the necessary links.

Consistency: either of these websites offer consistency with DECIBULLZ offering a lot more consistence with its limited but true to its goal product line while in BCF a person can go from one product line to another without desiring to do so.

Generalization: both websites are generalized with the format of an e-commerce website being predictable and easy to interact with for first time users.

 Dialogue initiative: both of these websites contain dialogue initiation where at any moment of these websites one can suspend tasks even in checkout.

Sustainability: both of these websites follow a sustainable approach where one doesn’t have search the product previously ordered again, BCF has a tendency for confusing product names limiting its sustainability.

Customisability: these websites offer limited customisation as a central nature of e-commerce website it needs to be predictable and direct.

Observability: both of the websites have very observation friendly interface where one can know where the person is and where he/she can go, where one can go directly to the links, but with BCF bringing its drawbacks of confusions making it difficult overall.

Recoverability: both websites offer enough recoverability from its errors, with DECIBULLZ providing a clear and visible 404 error with search box, BCF making it confusing with YOU’VE GONE OFFTHE BEATEN TRACK line not clearly showing if there is a error but proving enough links and a search dialog.

Responsiveness: both of these websites are responsive with DECIBULLZ being a little less responsive to load its heavy images, surprisingly BCF is more responsive than DECIBULLZ even with its larger offerings, with both being compatible for smaller resolutions like smartphones.


DECIBULLZ: DECIBULLZ is a very well thought out website leaving very little to point out, with its use of full resolution images it comes large in size to loadit might become more responsible when limiting image use also after providing social media links with images it again provides links to its social media in footer which is a sign of redundant design. This website leaves very little for improvement other than nit-picking.

BCF: BCF is a responsive website with a lot to offer rather too much to offer, this website must focus on usability of this website with main focus on user interface rather than product line extension, try to make it less confusing for people to checkout product’s needs.


Websitesin general must follow human computer interaction principles but more so in e-commerce websites both of these websites try their best to focus on usability with DECIBULLZ leaving a little to complain but BCF having a need for improvement both websites must focus on improving responsive with BCF must try to be direct to point when navigating like error page, BCF must shift its concentration from product line to actual functionality of website.


  • Decibullz, 2019. About us. [Online] Decibullz. Available at:[Accessed: 10 September 2019].
  • BCF, 2019. Boating, Camping and Fishing. [Online] BCF. Available at: [Accessed: 10 September 2019].



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