Advance Financial Accounting: Accounting Concepts, Measurement, and Soul Pattinson Measurement

ADVANCE FINANCIAL ACCOUNTING 1
UNIVERSITY NAME
STUDENT NAME
STUDENT ID
COURSE
DATE

ADVANCE FINANCIAL ACCOUNTING 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 and 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 in the books of SOUL PATTINSON company. This firm also
exhibits a going concern as its financial plans are more than one year
Table of Contents

ADVANCE FINANCIAL ACCOUNTING 3
INTRODUCTION...........................................................................................................................................4
ACCOUNTING CONCEPTS.....................................................................................................................4
Accounting period concept......................................................................................................................4
importance of the accounting period concept......................................................................................4
Going concern concept............................................................................................................................5
Importance of the going concern concept............................................................................................5
Business Entity concept...........................................................................................................................6
importance of the business entity concept...........................................................................................6
MEASUREMENT.......................................................................................................................................7
HISTORICAL COSTS MEASUREMENT.................................................................................................7
CURRENT VALUE MEASUREMENT.....................................................................................................8
SOUL PATTISON MEASURMENT..........................................................................................................8
DEPRECIATION........................................................................................................................................9
IMPAIREMENT.............................................................................................................................................9
RELEVANCE AND FAITHFUL REPRESENTATION............................................................................9
EXAMPLES OF HOW RELEVANCE IS BROUGHT OUT IN THE FINANCIAL STATETEMENT OF
SOUL PATTISON COMPANY................................................................................................................10
HOW FAITHFUL REPRESENTATION IS BROUGHT OUT IN THE FINANCIAL STATEMENTS OF
SOUL PATTINSON.................................................................................................................................11
CONCLUSION.........................................................................................................................................12
REFERENCES..............................................................................................................................................13
APPENDICES...........................................................................................................................................15
APPENDIX I: MEASUREMENT OF PROPERTY, PLANT AND EQUIPMENT..............................15
APPENDIX II: EARNING PER SHARE..............................................................................................15
APPENDIX III: JUDGEMENTS AND ESTIMATES..........................................................................15

ADVANCE FINANCIAL ACCOUNTING 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
Accounting period concept
states that the lifetime of a business can be divided into different periods. The divisions form the
financial years (Gluzová, 2017, pg. 436).
importance of the accounting period concept
 Aids in computing the actual expenses and incomes during a certain time frame.
 Helps in computing the net profit for the business (Weil, Schipper & Francis, 2013).
Pattinson which is the parent company and its consolidated agencies has its financial year ending
at 31st July 2018 The company in its books of account discloses that the company's borrowings
has accumulated to 5405 million Australian Dollars as at 31st July of 2018 which is its financial
year. Similarly, the company discloses to have realize a net profit on its operations in the parent
and the consolidated agencies of 252.6 Million Australian Dollars. The entity also had 2529
breeders, 400 wearners ,76 bulls and 2511 cattles as at 31st July 2018 which is the end of the
company's financial period (pg.16). The company employed an expert in revaluation to revalues
its assets before proceeding to the next financial year. Its report that dates 31 July 2018 shows
that the assets valuation of both the parent and the consolidated agency was 414 Million
Australian Dollars. The shareholders are the owners of the company and has a claim on the
company through being paid dividends. Pattinson company and its subsidiary entities reports that
a net profit of 266.8 million Australian Dollars has been set aside as the profit that is attributable
to the shareholders as a consideration for their capital invested in the business. Since the
Pattinson company financial year ends at 31st July of every year the company lights to ensure
that its financial recordings are published before this time. Due to this the WHSP a subsidiary
branch of the Pattinson company discloses a Remuneration Report that is presented to the
manager at this period of the year (pg.29) The accounting documents of every entity by the legal
requirements in every country should be subjected to independence audit in order to show