Accounting Concepts, Measurement and Features

ACCOUNTING CONCEPTS,MEASUREMENT AND FEATURES 1
UNIVERSITY NAME
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ACCOUNTING CONCEPTS,MEASUREMENT AND FEATURES 2
EXECUTIVE SUMMARY.
The purpose of this report is to shed light on the generally accepted accounting concepts that has
been feature in the company's report and their significance in facilitating preparations of
financial statements. The concepts mentioned include the going concern concept, business entity
concept, realization concept accounting period concept and money measurement concept. The
report further ascertains the importance of relevance and faithful representation as the basic
accounting characteristics. Faithful representation states that financial statements should be
prepared honestly without biasness. Financial statements should be relevant to the users for them
to use them in making financial decisions. Business entity concept is well brought out as
DOMINO’S PIZZA company is formed under the Corporations Act of Australia. The entity also
exhibits a going concern as its financial plans are more than one year

ACCOUNTING CONCEPTS,MEASUREMENT AND FEATURES 3
Table of Contents
INTRODUCTION...........................................................................................................................................4
ACCOUNTING CONCEPTS.....................................................................................................................4
Going concern concept............................................................................................................................4
Importance of the going concern concept............................................................................................4
Business entity concept...........................................................................................................................5
importance of the business entity concept...........................................................................................5
Realization concept.................................................................................................................................5
importance of the realization concept..................................................................................................5
Accounting period concept......................................................................................................................6
importance of the accounting period concept......................................................................................6
MEASUREMENT.......................................................................................................................................6
HISTORICAL COSTS MEASUREMENT.................................................................................................7
CURRENT VALUE MEASUREMENT.....................................................................................................7
DOMINOS’S PIZZA ENTREPRISES MEASURMENT............................................................................7
FAIR VALUE MEASUREMENT..........................................................................................................7
DOMINO’S PIZZA ENTRE DEPRECIATION..........................................................................................8
REVENUE MEASUREMENT AND RECOGNITION..............................................................................8
RELEVANCE AND FAITHFUL REPRESENTATION............................................................................8
EXAMPLES OF HOW RELEVANCE IS BROUGHT OUT IN BOOKS OF DOMINO’S PIZZA
COMPANY...............................................................................................................................................10
HOW FAITHFUL REPRESENTATION IS BROUGHT OUT IN THE STATEMENTS OF DOMINO’S
PIZZA.......................................................................................................................................................10
CONCLUSION.........................................................................................................................................11
REFERENCES..............................................................................................................................................12
APPENDICES..............................................................................................................................................14
APPENDIX I: EARNING PER SHARE...............................................................................................14
APPENDIX II: CONTRACTUAL OBLIGATION...............................................................................14
APPENDIX III: FAIR VALUE.............................................................................................................14

ACCOUNTING CONCEPTS,MEASUREMENT AND FEATURES 4
INTRODUCTION
Accounting concepts refers to assumptions, rules and principles that underlie preparations of
financial statements whereas measurement implies the technique employed by entities in
determining book values of accounting items. Measurement of financial items are brought out in
this report and qualitative characteristics of good financial information.
ACCOUNTING CONCEPTS
Going concern concept
According to this concept, business is assumed to operate into the unforeseeable future (Dewy &
Dewi, 2017, pg. 120).
Importance of the going concern concept
 It ensures that investors get regular income on their investments.
 Provides a criterion for the computation of depreciation.
 Its absence may make the cost of a fixed asset be treated as an expense in the year of
purchase.
The Domino Pizza company has been in existence since 1960 to 2018 dealing with the sale of
food to the consumers in different branches of the world with the founders being two brothers
Thomas and James Monaghan(pg32). The company exhibits a going concern concept by leasing
270,000 square feet to World Resource Centre within Ann Arbor which is recently constructing a
new 33000 square feet buildings that the company would lease when it is completed and this is
expected to be 2019.The amended lease will expire on 2029 with a two five-year renewal options
.The interest rates increasing from 12.4 million US dollars to 122.5 million dollars in 2017 is a
clear indication that there has been increased borrowing by the company so as to finance its
activities during the 2017 Recapitalization .The long termed borrowings is the major source of
the Domino's Pizza liquidity(pg27).As at 30th December 2018 ,the company had 65.0 million
US dollars as an unpaid and 161.9 Million US dollars that can be borrowed under its 2017
variable Funding Notes. The company enters into a 15 year operating lease showing going
concern nature of the business. The lease is anticipated to start in 2019 and be completed by
2034 depicting a going concern (Goo, Chi &Shen, 2016, pg. 539).