Accounting Concepts and Measurement in Fletcher Building

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Fletcher Building Foreign Exempt NZX

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Contents
Introduction................................................................................................................3
Descriptions of Accounting Concepts.......................................................................3
Conceptual framework, and the Issue of Measurement...........................................7
Fundamental Qualitative Characteristics - Understanding of Relevance and
Representational Faithfulness.................................................................................10
Conclusion...............................................................................................................14
References..............................................................................................................16

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Introduction
Fletcher Building limited has been chosen for the review. It is one of the largest New
Zealand listed company having wide capitalization of NZ$4 billion. The company is
engaged in the business of manufacturing, home builder, as well as partner on major
constructions as well as infrastructure projects. It is also the only organization that
has been local manufacturer of cement left in New Zealand. The business has been
widespread globally with 20000 employees and 34 business units. In this
assignment, we will discuss about the accounting concepts , conceptual framework
of measurement , issue in measurement and how the same have direct impact on
the financial report of Fletcher Building. Further, we have discussed about the
qualitative characteristics that must be present at the time of preparation of financial
statement. It has been observed that the selected company has follows the same
adequately at the time preparation (Annual Report, 2018).
Descriptions of Accounting Concepts
Money Measurement Concepts- this accounting concepts states that a company
must recognize only transactions & events which are capable of being measure in
term of monetary value in the financial statements. In the stated case of Fletcher
building, it has been appearing that the focus of the company has been made on the
transactions with quantitative information rather than qualitative information. Some of
transaction that cannot be recorded in the financial statement has resultant not
recorded by the Fletcher Building is as follows:

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 Working condition of employee
 Employee skill level
 Customer support quality
Business Entity- this accounting principle states that an organization must record
all transactions pertain to the business separately from their owner & other business.
In the stated case the company has issued 156306701 shares during the year. The
company has also accounted 2820341 shares as treasury stock that has been
reduce directly from the number of ordinary shares
Going Concern Concept- As the name suggest, it states about the assumptions
which provides that the entity would work or remain inbusiness in the future. In the
state’s case of Fletcher Building limited, the annual report clearly pretends the
business is working on going concern concepts. Some of the instances for the same
are
Capital Risk Management- the annual report in this regard depicts that the main
purpose of the company for managing the capital has been to safeguard the group’s
ability in concerned with the going concern that resultant give return to their
shareholder and benefits to the stakeholder by way of maintaining optimum capital
structure which will then reduce the cost of capital.
If we talk about the brands, it has considered to have indefinite use life when there
are various factors which indicates that there has not been any limit on the capacity
for generating foreseeable cash flow from the same. Here, it has been concluded
that there are no factors that that provide the evidence of obsolesces because of a
regulatory condition or technology. Hence, the business is running at going concern
concepts.