Analysis of Accounting Concepts: Unibail-Rodamco-Westfield Report

This report provides a comprehensive analysis of the financial accounting practices of Unibail-Rodamco-Westfield (URW). It begins by identifying key accounting concepts applied by the company, including business entity, money measurement, realization, going concern, historical cost, accrual, and materiality. The report then delves into the challenges of measurement within URW's financial statements, highlighting issues such as data manipulation, amendments in accounting, and problems in measuring various assets and liabilities. Finally, it examines how URW maintains qualitative characteristics like representational faithfulness and relevance in its financial reporting. The analysis offers insights into URW's financial reporting and accounting standards.

ADVANCED FINANCIAL ACCOUNTING
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Table of Contents
Introduction................................................................................................................................2
1. Accounting concepts used by Unibailrodawestfield..............................................................2
2. Issue of measurements in the financial statement of Unibailrodawestfield...........................4
3. Qualitative characteristics such as representational faithfulness and relevance maintained
in the financial statement by Unibailrodawestfield....................................................................7
Conclusion..................................................................................................................................9
Bibliography.............................................................................................................................10
1

Introduction
Financial accounting that is advanced in nature is essential for a firm as it includes
performances that are directly associated with the standards of accounting which prevails in
the country. Reporting by the help of financial accounting are associated with the concepts
and performance of the firms reported in financial statement. In this study,
Unibailrodawestfield has been considered along with its issues that are presented in the
annual report of the organisation. It also includes the qualitative characteristics that represent
faithfulness and relevance in the financial statement of the firm. Moreover, the standard of
accounting that has been evaluated during the normal business operation includes the factors
that affects overall transactional theory of accounting.
1. Accounting concepts used by Unibailrodawestfield
The concept of accounting mainly includes the conditions as well as assumptions that are
directly based on the assumptions along with the overall business statement1. The statement is
mainly prepared after a financial year which includes the cost of finances that are required to
be incurred during their normal operation in the business. Different types of accounting
concepts are there on which a business firm is based on. After analysing the annual report of
Unibailrodawestfield, different concepts of accounting have been identified which are as
mentioned as follows.
Business Entity
The non-public expenses and incomes do not seem to be treated because the dealing of the
business unless withdrawn or inserted within the company’s resources. Following this idea of
Unibailrodawestfield is ready to possess a legal separate identity from its homeowners within
the business2. Unibailrodawestfield encompasses a separate legal existence from its
shareholders and is treated individually. As an example, the annual reports and monetary
statements of Unibailrodawestfield mentions no personal dealing of the homeowners that
reflects the corporate entity thought.
Money measurement accounting
1 Abernathy, J.L., Beyer, B., Masli, A. and Stefaniak, C.M., (2015). How the source of audit committee
accounting expertise influences financial reporting timeliness. Current Issues in Auditing, 9(1), pp.1-9.
2 urw.com, (2019). Annual Report 2018. <https://www.urw.com/-/media/Corporate~o~Sites/Unibail-
Rodamco-Corporate/Files/Homepage/INVESTORS/Financial-Press-Releases/Financial-Results/Half-and-Full-
Year-Results/EN/20190213-2018-Full-Year-Results_onlyEN.ashx>
2

The corporate uses the currency pound so as to report all the transactions within the annual
report3. Unibailrodawestfield uses the cash activity thought so as to record the monetary
transactions within the books of accounts. Additionally, the transactions that cannot be
measured by financial units are not recorded within the books of accounts rather a
memoranda has been ready for the identical. The most reason behind using pound is to create
the corporate financially comparable within the business.
Realisation concept
The realisation thought includes recognising revenues only if the physical product are
transferred or rendered. The quantity of sales revenue reported within the profit-and-loss
statement of the corporate is mentioned for that merchandise that is already transferred to the
consumers4. Moreover, the corporate recognises the Deferred Tax Assets on the chance that
future taxable amounts are offered to be used in temporary losses and variations.
Unibailrodawestfield follows the thought of realisation below that the sales revenues are
recognised only if the products are transferred to the consumers. Thus, there are prospects
that the company’s Deferred Tax Assets recognition might modification thanks to the
operational performance in future.
Going Concern Concept
Original prices are most popular by the businesses over and higher than its value below the
thought of going concern5. Unibailrodawestfield follows the Going Concern concept which
has that the corporate will operate indefinitely. Victimisation this idea of accounting
Unibailrodawestfield have mentioned the corporate may be a going concern unless the
administrators shall liquidate or stop operations or does not possess realistic different
however to try and do therefore. For instance, Unibailrodawestfield restricted disclosed all
the matters in relation to going concern within the notes to accounts and footnote sections of
the annual report. The company would go on if the owner of the organisation withdrew their
funds from the total amount of working capital.
Historical cost concept
3 Wilson, B. and Marrer, K., (2019). Exploring Student Responses Regarding Most Difficult Coursework
Prior to Financial and Managerial Accounting. Journal of Higher Education Theory and Practice, 19(1). pp. 1-
2.
4 Brown, R. and Jones, M., (2015). Mapping and exploring the topography of contemporary financial
accounting research. The British Accounting Review, 47(3), pp.237-261.
5 Al-Sulaiti, J., Ousama, A.A. and Hamammi, H., (2018). The compliance of disclosure with AAOIFI
financial accounting standards: A comparison between Bahrain and Qatar Islamic banks. Journal of Islamic
Accounting and Business Research, 9(4), pp.549-566.
3

As per this idea, the corporate records the assets in their original value; rather than the value
which may be used for an indefinite amount6. This helps in understanding actuality monetary
position of an organisation throughout the year no matter any changes within the market. As
an example, the corporate Unibailrodawestfield uses the historical price conventions so as to
record transactions apart from financial assets available-for-sale, spinoff monetary
instruments, non-derivative monetary instruments, share-based payment and contribution
arrange assets.
Accrual concept
One of the foremost vital accounting ideas involves the accounting of accounting.
Unibailrodawestfield uses the accounting of accounting below that transactions associated
with the monetary amount are recorded no matter the time once the money was received or
paid7. For instance, the corporate is standing at an excellent position for payment of rent for
two months of 5500 pounds. This helps in understanding actuality monetary position of an
organisation throughout the year. During this scenario, the corporate records the assured
quantity of rent of 5500 pounds within the books of accounts as outstanding rent no matter
the time once the money was paid. It also points out the overall concept of accrual basis in
which the unpaid or the receivable amount would be carried forward to the upcoming years.
Materiality concept
During this scenario, corporations need to produce all the corporate information within the
books of accounts. The activities of a business are not material then the auditors would offer
a view to the corporate8. If the financial information of the corporate provided within the
annual report reflects a real and honest read then materiality is achieved. For the target of
audit done by other auditing company, overall materiality of around 12 million pound of the
clusters has been used, that is around 5th of PBT or profit before tax.
2. Issue of measurements in the financial statement of Unibailrodawestfield
Financial statements are required to be measured after a certain period of time that might be
exactly one financial year for measuring its value as well as performance for that period. The
6 De Waegenaere, A., Sansing, R. and Wielhouwer, J.L., (2015). Financial accounting effects of tax
aggressiveness: Contracting and measurement. Contemporary Accounting Research, 32(1), pp.223-242.
7 Christensen, H.B., Nikolaev, V.V. and Wittenberg‐Moerman, R., (2016). Accounting information in
financial contracting: The incomplete contract theory perspective. Journal of accounting research, 54(2),
pp.397-435.
8 Do, D., Tran, M., Nguyen, T., Truong, D. and Pham, D., (2018). Determinants influencing differences
of financial statements under Vietnamese accounting and international accounting: The case of
Vietnam. Management Science Letters, 8(6), pp.555-568.
4

major source of finances includes the issue that helps in measuring the issue that are
identified by the financial statement of the firm. There are completely different bases with the
assistance of that cash measure of an organization is performed9. Within the case of
Unibailrodawestfield, it is been found that the corporate uses historical accounting because
the basis of economic coverage. The most reason behind this includes simplicity and price
benefits it provides to its users. These five bases embody historical prices, fair value, the
worth in use, realisable price and deprival value. Measurements of economic coverage will
directly or indirectly have an effect on the performance of an organisation. However, there
are some problems associated with measurements that the corporate featured throughout the
course of business.
Manipulation of knowledge with accounting standard
Unibailrodawestfield has found that thanks to the usage of historical accounting values of
many transactions are disingenuous to replicate the great position of the corporate10. Under
the historical accounting technique of measure, the corporate faces problems like
manipulation of knowledge. For instance, lease coverage of the corporate featured problems
in respect to the inequality between this price and historical value assist in measuring of a
finance lease beneath historical value once the changes in Accounting Standards becomes
tough for Unibailrodawestfield. It may be said that insurance includes many measure
problems that make it tough to grasp the money position of Unibailrodawestfield. This
particular company featured problems in respect to measurement insurance contracts of the
corporate throughout the year. Insurance contracts of the corporate Unibailrodawestfield are
created for quite one year and its original outcome is tough to be measured till the resolution
of the uncertainties. Unibailrodawestfield found it tough to live the worth of things like
money assets available-for-sale, by-product money instruments, non-derivative money
instruments, and share-based payment and contribution set up assets victimisation historical
accounting11. Therefore, Unibailrodawestfield measures this stuff with the assistance of
honest price. The most reason behind this is often that the things are extremely volatile and
changes with fluctuations in market trends.
Amendments in accounting as well as cost concepts
9 Francis, B., Hasan, I., Park, J.C. and Wu, Q., (2015). Gender differences in financial reporting decision
making: Evidence from accounting conservatism. Contemporary Accounting Research, 32(3), pp.1285-1318.
10 Drake, M.S., Quinn, P.J. and Thornock, J.R., (2017). Who uses financial statements? A demographic
analysis of financial statement downloads from EDGAR. Accounting Horizons, 31(3), pp.55-68.
11 Jiang, J., Wang, I.Y. and Xie, Y., (2015). Does it matter who serves on the Financial Accounting
Standards Board? Bob Herz’s resignation and fair value accounting for loans. Review of Accounting
Studies, 20(1), pp.371-394.
5

Historical accounting created it tough for the corporate to create amendments within the price
of things thanks to inflation. Measure of transactions is completed on the premise of financial
units however it is necessary to make sure that the item may be measured in terms of cash12.
During this scenario, honest price would have contended a stronger role in valuing the costs
of the assets that the corporate possess. Unibailrodawestfield has been found to have
problems related to measurement of things in terms of cash. They have been providing
services to customers, in terms of material as well as WIP, debtors and money. It also
includes un-crystallised liabilities, research and development prices, immature money assets,
and fixed assets that have helpful life benefits and progress. As an instance, the plant and
instrumentation of Unibailrodawestfield possess razed elements, factory, division, plant in
method and alternative things of plant. Unibailrodawestfield featured problems whereas
measurement some indivisible assets it posses throughout the year. Measurement them as a
separate item was a tough task for Unibailrodawestfield throughout the year. One amongst
the necessary problems associated with measure involves prediction and prediction. Whereas
the calculation of depreciation it is tough for Unibailrodawestfield to estimate the helpful
lifetime of assets.
Issued included in financial statement and other measurements
Recoverability of dangerous debts also as stock realisable price is tough to be calculable by
Unibailrodawestfield for recording within the record. Overlapping of expenses and financial
gain incurred or attained by an organization may be a common issue within the method of
measure of economic statements. This overlapping happens as Unibailrodawestfield is
concerned in playacting many transactions like getting stock at completely different costs.
During this scenario, the corporate notice it tough to understand the historical and current
values of the assets along with treatment of various transactions is completed otherwise and
within the amount of acquisition the identical13. Unibailrodawestfield featured problems
associated with the measure of discounted future liabilities on the premise of your time span.
Another necessary issue associated with measure featured by Unibailrodawestfield includes
allocation of transactions to assets and periods. The selection of discount rates depends on the
year it absolutely was incurred on that the worth of future liabilities is calculated14. During
this scenario, Unibailrodawestfield uses pound to record and control the money transactions
12 Lara, J.M.G., Osma, B.G. and Penalva, F., (2016). Accounting conservatism and firm investment
efficiency. Journal of Accounting and Economics, 61(1), pp.221-238.
13 Li, K.K. and Sloan, R.G., (2017). Has goodwill accounting gone bad?. Review of Accounting
Studies, 22(2), pp.964-1003.
14 Oldroyd, D., Tyson, T.N. and Fleischman, R.K., (2015). American ideology, socialism and financial
accounting theory: A counter view. Critical Perspectives on Accounting, 27, pp.209-218.
6

of the business from all its subsidiaries. Finally, the corporate featured problems with cash
measure of assets and liabilities.
3. Qualitative characteristics such as representational faithfulness and relevance
maintained in the financial statement by Unibailrodawestfield
Representational quality
Representational quality additionally named as dependability mentions the extent to that
information like resources, transactions and obligatory claims are correct for the corporate.
For instance, if a business reports $ 600,000.00 as accounts collectible at the end of the year
within the record then that quantity is taken into account to be recorded on it date. For
information to become realistic devoted, it has to be complete, neutral or free from biases and
error proof along with distinctive the right monetary position of an organisation, realistic
quality is very essential. This provides the stakeholders with a real plan of the accounts
collectible that the business holds.
Relevance
The qualitative characteristics of accounting like connexion embody the substance of
knowledge within the method of monetary deciding of the corporate. For instance, the choice
of commutation instrumentality needs information like the value of recent assets and
expenses for repairing the previous one. Relevant accounting information includes
corroborative price mentioning past events and prognostication value involving future unsure
events, whereas distinctive the right monetary position of an organisation is critical15. During
this case, the result of the comparison between the value of recent assets and expenses for
repairing the previous one helps choose whether or not the instrumentality has to get replaced
or not.
Completeness and natural
Information in monetary statements would be devoted illustration once it is complete and
provides a transparent image of the business16. Information in monetary statements would be
devoted illustration once it is neutral or free from biases. This includes mentioning verity
quantity of transactions while not over or underneath stating the amounts. It also includes
mentioning the particular quantity of transactions while not over or underneath stating the
15 Nahar, A., Subadriyah, S. and Sofwan, A., (2018). The Analysis of Human Resources Policies and
Regional Financial Accounting System on Regional Government Financial Statements’ Quality. SRIWIJAYA
INTERNATIONAL JOURNAL OF DYNAMIC ECONOMICS AND BUSINESS, 1(4), pp.387-404.
16 Suryanto, T. and Ridwansyah, R., (2016). The Shariah financial accounting standards: How they
prevent fraud in Islamic Banking. European Research Studies, 19(4), p.140-141.
7

sum a part of transactions for own advantages. Information in monetary statements would be
devoted illustration once it is unbiased along with different other information. For example,
the knowledge of loan of certain amount possessed by the corporate cannot be treated as
complete if the date of maturity is not provided.
Decision making
The contributed equity capital within the record of the corporate would facilitate
Unibailrodawestfield to require selections in relevancy the difficulty of equity shares to the
shareholders. For instance, the amount of debt that Unibailrodawestfield possesses helps
choose the long run amount of loan and within the year 2018, the record of the corporate
reflects no debts that mean that the company would choose within the next fiscal year.
Moreover, selections like repurchase of shares or supply bonus shares would be in love the
assistance of relevant information on contributed equity17. If the amount of loan mentioned
within the record does not reflects realistic quality the impact would not be abundant
poignant that absence of funds would do. Currently, the corporate holds property, plant and
instrumentality within the financial statement that supports in choosing whether or not the
corporate would purchase more of it in the present year as well as in upcoming years. The
choice of purchase of assets and properties depends upon the number of the identical funds
within the record.
Representational quality and relevance
The method of accounting for assets and liabilities facilitates the corporate to require
selections within the future years for better evaluation of available sources of finances. Both
quality as well as relevance play a vital role in assessing the monetary performance of a
corporation and perform comparison within the trade. However, the role of relevance is
additional necessary than honest illustration in recording assets and liabilities. The method of
deciding needs relevant information on the idea of that suggestion would be created. The
assets and liabilities recorded by Unibailrodawestfield facilitate the method of deciding in
relevancy the operational activities of a business. Decision making is one in all the foremost
necessary tasks that a business has to perform to be able to operate within the trade18.
17 Lara, J.M.G., Osma, B.G. and Penalva, F., (2016). Accounting conservatism and firm investment
efficiency. Journal of Accounting and Economics, 61(1), pp.221-238.
18 Drake, M.S., Quinn, P.J. and Thornock, J.R., (2017). Who uses financial statements? A demographic
analysis of financial statement downloads from EDGAR. Accounting Horizons, 31(3), pp.55-68.
8

Conclusion
Financial accounting is the procedure that assists an organisation in their recording of
transaction that are financial in nature along with maintaining the terms of accounting as per
the standards of accounting. The boards of accounting standard mainly associated with IFRS
helps in developing the overall system of financial reporting along with other concepts of
financial accounting. Unibailrodawestfield mainly focused on the real estate business that has
a separate legal entity which is totally different from the owner or the shareholders along with
integrating other vital information in the firm. The firm has also disclosed the annual report
that mainly consist of financial information as well as general information about the
organisation which includes the relation of different manipulation in the overall process of
financial accounting. Measurement in accounting of the company includes viability that is
financial in nature along with understanding the overall concepts of overall faithfulness as
well as relevance of the firm during the particular financial year.
9

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loans. Review of Accounting Studies, 20(1), pp.371-394. Available at
https://www.researchgate.net/profile/John_Jiang5/publication/271659412_Does_it_matter_w
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11