Accounting Concepts and Measurement Issues: A Case Study of News Corp

This report discusses the important accounting concepts and measurement issues in the financial statements of News Corp. It explores the relevance and representational faithfulness of the reports, highlighting the use of fair value measurement. The case study provides insights into the firm's operations and its adherence to accounting standards.

Running head: NEWS CORP
NEWS CORP
Name of the Student
Name of the University
Author Note

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Executive Summary
The business is greatly liable to the different stakeholders and with respect to this, it can be
considered to be relatively important by the business organizations, that if they want to have
strong relations with them, they will be required to maintain transparency. The accounting
concepts and related principles assist the business in the formation of the accounting
statements in a manner such that they will successfully be able to achieve the financial
accurateness. The report outlines the important accounting concepts which is then followed
by the discussion on the issue of measurement and the relevance and representative
faithfulness. The firm chosen for the report is the New Corp.

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Table of Contents
Introduction.................................................................................................................................3
About the firm..............................................................................................................................3
Discussion...................................................................................................................................3
The concepts of accounting and related description...............................................................3
Understanding the issue of measurement..............................................................................5
Qualitativeness of the reports: Relevance and Representational Faithfulness......................6
Conclusion..................................................................................................................................7
References..................................................................................................................................8

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Introduction
Accounting can be acutely defined as the manner in which a business tends to prepare
the financial statements of the firm so as to present a fair and accurate representation of the
overall firm in the eyes of the different investors (Bekaert and Hodrick 2017). However, to
bring about accuracy and similarity of the presentation of the different accounting statements,
it becomes considerably crucial for a business to ensure that the firm is successfully able to
meet the needs of the investors and hence, all the financial as well as the accounting
standards of the field will be adequately required to be followed by any organization (Barr and
McClellan 2018). In line of this, the primary aim of the report is to underline the different
accounting standards which are available and thereby evaluate the efficiency of the report of
the New Corp. firm chosen in reflecting them. In addition to this, the concept of the issue of
measurement and the qualitative aspects of the financial reporting shall also be discussed
using theoretical concepts and practical examples from the financial statements of the firm.
About the firm
The News Corporation is a globally diversified media as well as information services
company which is highly focused on distributing as well as creating content in lieu of the
consumers as well as the business (Newscorpcom.com 2019). The firm comprises of
business and operations across a range of media which comprises of the news and
information services, digital real estate, publishing of a book, cable network programming as
well as digital education. In addition to this, the firm has distributions under various brands
which include the Dow Jones and the Wall street journal brands as well.
Discussion
The concepts of accounting and related description.
The accounting systems are referred to as assumptions which are generally made by a
business which go a long way in helping the business to ensure that their financial statements
are accurate in nature (Burtonshaw-Gunn 2017). These concepts often form the basis of the
accounting and help a firm to ensure long term success with respect to the financial reporting
and accountability. The different accounting concepts which have been made use of by the
accounting of the News Corp can be stated to be as follows:
Going concern concept
The going concern concept of any business states that in case where the business
wants to ensure long term success for itself, al its operations need to be designed according
to the assumption that the firm will continue to perform well in the long term (Cannon 2019).
The accountant in such a scenario would be required to ensure that any such action will not
be required to be taken by the business which will be short sited. Many business
organizations tend to undertake initiatives which are good for the short term of the firm but not
adequate for the long term of the organization (Kimmel et al. 2016). Hence, under this, all
decision making and long term focus of the business needs to be undertaken by keeping in
mind the long term success of the business.
The dual aspect concept
The dual aspect of accounting states that, for any business to balance the overall
statements in the right manner, it will be required to see to it that it is successfully being able
to manage the firm and its operations with the help of the Dual side concept. The particular

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concept states that, all the transactions in a business have a dual impact and in line of this, if
a business begins with a certain transaction then two accounts shall be affected in the same
manner. If the business receives a payment of $10000 then the transaction shall not only
have an impact on the cash account but also in the sales account. For each credit
transaction, there needs to exist a corresponding debit transaction. With respect to the
financial statements of the New Corp, it can be rightfully understood that the firm tends to
follow dual system of accounting (Kulikova 2016). The different accounting statements which
are prepared for the businesses relate to the Cash flow statement, the Balance sheet, the
consolidated income statements and others. All transactions in the business find their
subsequent credit and debit side (Newscorpcom.com 2019).
The money measurement concept
The money measurement concept can be understood to be another key accounting
principle with respect to which it is required to be understood that, each aspect is required to
be recorded in terms of monetary value (Baboukardos and Rimmel 2016). The accounting
statements are largely concerned with the overall finances as well as the funds of the
business and with respect to this, it can be considered important for the business to ensure
that, no such transactions which do not have a corresponding financial or monetary value are
added to the particular financial statement because they are not deemed to be of utmost
importance to the business. The transactions which cause an income or which lead to
payment are only to be considered to be crucial and are required to be added to the books of
accounts (Kulikova 2016). From the accounts of the New Corp., it can be rightfully reflected
that the business tends to follow the money measurement concept well into its operations
which means that, all the transactions which can be rightfully measured in terms of money are
only recorded and the other transactions which cannot be measured in monetary terms by the
business do not find their place in the books of accounts of the business. Moreover, in line
with this, it can also be understood that in order to engage in long term success, the business
would be required to measure the overall profitability functions in monetary aspects itself.
The Accounting Period Concept
The accounting period concept states that, the books of financials which are to be
prepared need to have a certain degree of stability in them. They need to be prepared at
regular intervals and in line of this, they will also be required to check that, they are prepared
in a manner such that, the comparing of the financing becomes easier. Hence, it has to be
understood that, all firms are required to maintain a specific accounting period concept based
on which they will be required to develop the financial statements regularly. Generally, the two
periods for which a firm prepares the financial statements can be understood to be January to
December or April to March (Karadag 2015). After observing the financial statements of the
organization it was found that the firm follows a considerably different cycle than that of the
other firms as present in the industry. In line of this, it can be mentioned that, the financials of
the firm end on June of every year and hence, the financial year which is undertaken by the
firm can be considered to be from July to June of every year.
The Verifiable Objective concept
The verifiable objective means that, the financial statements and the assumptions as
well all the transactions which are made in the statements need to be backed by accurate
verifications. No transaction can be made without a corresponding proof and in addition to this
the business will also be required to make accurate assumptions which will then be backed by

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the documentation. This documentation for the same shall be in the form of either vouchers,
the folios, invoice or other bills as well as cheques. The notes to accounting serve as the
largest proof to the face that, News Corp. is successfully able to provide adequate verifiable
objective to the different key assumptions as well as confirmations which are given in the
financial statement of the firm. In line of this, it is required to be understood that, the notes
provided the basis for the assumptions which had been adopted by the firm and in addition to
this, the various folios, vouchers as well as other proofs have been backed accordingly by the
firm.
Cost and revenue concept
Another crucial Accounting concept which has been followed by the business can be
stated to be relating to the concept of revenue and cost (Schaltegger and Burritt 2017). The
concept generally mentions that in order to find the accurate profit which is being incurred by
the business at a particular frame of time, it becomes considerably important for the business
to ensure that, the costs as well as the revenue of the business are aligned in a manner such
that, it is able to reflect the true profit being made by the firm in the particular time period. In
this way, the firm will be able to gain considerable success in the long run (Kaplan and
Atkinson 2015). News Corp has remained transparent to this concept as well with respect to
which, it can be rightfully understood that the firm has undertaken the best assumptions and
reflected the correct cost and revenue for the firm at the right accounting period.
Understanding the issue of measurement
All the financial statements which are generally prepared by the firm in lieu of the
overall performance of a firm need to be prepared in a manner such that they are able to
present a true image of the firm in the eyes of the different customers. The conceptual
framework which is generally a guiding principle for the accounting statement needs to be
prepared in a manner such that, it is successfully able to fulfil the needs of the different
investors and also bring out the most accurate results. However, one of the most complex
aspects of the financial reporting and statement of accounts can be understood to be the
measurement issue (Libby 2017). The role of accounting lies to present the accurate financial
and economic results of the business operations, however, due to the issue related to the
measurement it often becomes considerably difficult for the business to ensure that it is being
able to measure all the values of assets and liabilities in an accurate manner. However, there
does not exist a measurement to guide the same and provide the setters a choice with
respect to the conceptual base they require to follow. Moreover, not all businesses can go
with the regularised conceptual framework as formed and in line with this, it becomes quiet
difficult for them to manage the overall operations in the right manner (Uwuigbe et al. 2017).
As a solution to the particular problem, the fair value measurement is generally made
use of by the different firms as present. The measurement guideline is more consistent and
fulfils the overall aim of the financial reporting (Hoyle, Schaefer and Doupnik 2015). The New
Corp also faces related measurement issues and as the operations and services which are
provided by the firm are quite different from the general offerings, the firm tends to make use
of the fair value measurement and the annual report has mentioned that, the increase and
decrease in the royalty rates, control premiums, growth rates and related concepts can lead
to a significantly higher fair value of measurement or a lower fair value of measurement,
depending on the scenario which is being faced by the business. The financial reports also
mentioned that, the management tends to re-evaluate the different tax positions at regular
intervals with respect to which new information regarding the measurement can be availed.
Moreover, the measurement and the recognition of the Company`s pension can be
understood to undergo significant judgements (Libby 2017).

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Moreover, recently, the firm underwent a new method so as to ensure that, it will be
able to come up with a precise measurement of internet costs and service by improving the
correlation between the accounting estimate as applied and the , the projected cash flow and
the spot rates. Additionally, the firm measures certain derivable and securities at fair value
basis. The firm follows the ASC 820 in lieu of this (Newscorpcom.com 2019).
As the operations of the firm have been laid in a manner such that, it becomes difficult
to quantify the different assets as well as the liabilities of the firm, the firm often considers the
fair value measurement system in various dimensions like the value of the assets, liabilities,
pension, stock, equity and the capital management of the firm. Hence, by following the fair
value, the New Corp. is being able to bring about a balance in its financial statements and
ensure that it becomes comparable.
Qualitativeness of the reports: Relevance and Representational Faithfulness
The financial statements of a business are required to be accurate and fair and of the
best quality so that they are successfully able to reflect the true positioning of the firm and
assist the business investors to get the true picture of the firm. Hence, the financial and
accounting statements are required to have certain qualitative characteristics. The two crucial
characteristics which are required to be possessed but the business in its reports are
relevance and representative faithfulness (Finkler, Smith and Calabrese 2018).
Relevance
With respect to the relevance, it needs to be understood that the information provided
in the financial statement is required to be relevant in nature and have the capacity to
influence the investors and change their decision making.
The financial statements of the firm are required to possess only the critical information
and must fulfil the queries and necessary details for the investors. Crucial information like
trend analysis, Earning per share, the net profits and other data must be present in the
reports. If not, the financial report loses out on its efficiency (Henderson et al. 2015).
Faithful representation of the statements.
In regard to the faithful representation of the financial statements, it is required to be
understood by the business that, the financial and accounting statements are required to
reflect the true nature of the firm and must not form impossible pictures over the position of
the firm. Some of the crucial characterises of the faithfulness of the statement can be given as
follows:
 The statements need to be complete in nature. This means that, the different readers
who are required to undergo the information should be provided with a complete
picture.
 The statements are required to be error free and lastly they are also required to be
unbiased in nature.
 When a particular financial statements meets with all these three aspects, only then it
is understood to have provided a true picture (Karadag 2015).
The statements of the New Corp. can be understood to have faithfully reflected the true
positioning of the firm and has provided only the relevant information as available. The auditor
report reflects this statement and all the information has been presented in a manner such
that the investors will be able to make the right use of it (Newscorpcom.com 2019). The
faithfulness and the reliability of the financial reports as present in the annual statements can
be largely supported by the overall review of the external auditors of the firm. This means
that, the external auditors of the firm are present in order to ensure that they are successfully
able to assess the overall clarity of the books of accounts. Moreover, they have also outlined
the different key auditing matters which is faced by the firm in order to see to it that the overall
operations of the firm can be understood to be relevant and decisions can be made
accordingly. Hence, as the financial statements of the firm are error free, reflect the true

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nature of the firm and complete in nature, they represent the faithful representation of the
current condition of the firm. In addition to this, it can also be understood to be important for
the firm to reflect relevant matters and therefore, all crucial matters of the News Corp have
been reflected in the financial statements and the non-monetary matters will be presented in
the notes to the accounts.
Conclusion
Therefore, from the analysis as done in the previous sections, it can be rightfully
understood that, the accounting forms a crucial part of the organization and hence, the firm
must ensure that it is successfully able to make use of the different accounting concepts,
standards as well as the policies while forming the financial statements as it makes it
considerably easier for the firm to represent the actual image of the firm. The report undertook
the analysis of the accounting concepts being made use in the annual report of the News
Corp Limited. The theoretical meaning of the concepts were understood which was then
followed by the real examples from the financial statements. The second part of the report
focused on the overall issue related to measurement which exists in the accounting
statements. The latter half of the report focuses on the qualitative aspects of a report which
state that relevance and representative faithfulness are crucial. This helped in understanding
that in order to ensure long term success, the firm would be required to maintain transparency
which helps to attain the overall goals of the business.

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