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This essay has been developed for the purpose of analyzing the given statements ‘Briscoe Group will measure and recognize all of the companies’ assets in its balance sheet’. This has been carried out by carried out discussion in relation to the purpose of creating a balance sheet as stated by the conceptual framework (CF) for financial reporting. In addition to this, it also discussed the recognition and measurement issue in accounting and examining the revaluations of property, plant and equipment within Briscoe Group and evaluating the reason for the adoption of the respective accounting policy.

Brief Description of Balance Sheet

Balance sheet is regarded as a financial statement developed by a company that provides information in relation to its assets, liabilities and equity position over a respective time period. The balance sheet or statement of financial position provides assets on one side and liabilities on the other side (Makoujy, 2010). It is prepared on quarterly, monthly or an annual basis and represents two major financial elements that are assets and liabilities. As per the CF of financial reporting, assets can be regarded as the economic resources that intends to provide future benefits to businesses while liabilities represents the obligations  of an entity arising from the previous events and its settlement is likely to cause outflow of resources. 

Balance Sheet Purpose as stated by the CF for Financial Reporting

The primary purpose of balance sheet as provided by the CF of financial reporting is to assist the decision-making of its end-users such as potential investors, lenders and other creditors who rely on analyzing the significant position of assets and liabilities of a company for making their respective investment decisions. The objective of a business entity behind the development of a balance sheets it to disclose its financial status in an appropriate manner (Bazley, Hancock & Robinson, 2014). 

Recognition and Measurement in Accounting according to CF of Financial Reporting

IAS 39 standard in relation to recognition and measurement of assets and liabilities has provided criteria that need to be meet by a financial asset or liability to be recognized within a balance sheet. As per the criteria, the assets or liabilities need to be recognized within a balance sheet only if economic benefits are expected to flow to an entity and the cost of value of the respective financial elements could be determined in a reliable manner. The recognition criteria should provide relevant and faithful information about an entity assets and liabilities to its end-users (IFRS Conceptual Framework, 2018).

The selection of a measurement basis as per the CF of financial reporting should be done on the basis of considering the type of information present within the balance sheet. The major factor that need to be emphasized for selecting a measurement basis are nature of asset or liability and expected future cash flows that determines relevancy of information to be considered during selecting a measurement approach. On the other hand, the faithful presentation while selecting a measurement approach is affected by inconsistency by the use of a relevant measurement method.  Thus, it can be said that major factors that need to be considered during financial reporting for measuring the financial value of significant financial elements are relevance and faithful presentation (Wahlen, Baginski & Bradshaw, 2010). 

Critique the balance sheet on the issues of measurement

Entities are required to reflect all the assets and liabilities in balance sheet but each of such assets need to be measured either at historical cost or fair value depending upon the measurement criteria selected by the company. Before the implementation of new conceptual framework, entities need to maintain the assets at historical cost to reflect the reliable information in balance sheet but change in market condition make the information presented in balance irrelevant. It has made the entities to make use of fair value measurement criteria to value the assets to reflect the relevant information according to market value of each asset. But it has raised the measurement issue as many assets have been overvalued and balance sheet reflects wrong information. According to new measurement criteria, assets must be value at historical cost except items that are impact due to market change. So, it is required to measure some of assets at historical cost and some at fair value depending on asset category (IFRS Conceptual Framework, 2018). 

Revaluation of property, plant and equipment by Briscoe Group

Briscoe Group has adopted the use historical cost accounting conventions for developing its different financial statements but some of assets have been revalued in accordance with the specific accounting standards. In order to apply the accounting policies and measurement criteria, numbers of estimates and necessary judgments have been made on the basis of historical experience. Revaluation of certain assets has been made depending upon the cash flow generated in future and the carrying value of each asset. As per information given in annual report about the measurement criteria of property, plant and equipment it has been found that they are measured at historical cost less any depreciation. Some of PP&E have adjusted for downwards revaluation (Impairment). There are two class of property, plant & equipment and they are land & building and plant & equipments. Among these assets only plant & equipment have been revalued downwards through impairment. Screenshot of measurement of property, plant and equipment has seen presented below:

Screenshot of measurement of property, plant and equipment

(Source: http://briscoegroup.co.nz/wp-content/uploads/Annual-Report-YE-Jan-2019.pdf)

Value of plant and equipment has been revalued downward (Impairment) because carrying value of assets is lower than the economic benefits (present value of cash flow) received by company on such assets (Briscoe Group Limited, 2019).


It can be stated on the basis of overall discussion held within the essay that balance sheet is major type of financial statement prepared by an entity that provides information about its assets, liabilities and equity position. The CF has provided guidance to business entities regarding the recognition and measurement criteria in accounting. Also, the revaluations of property, plant and equipment has a significant impact on the decision-making of users.



Bazley, M., Hancock, P. & Robinson, P. (2014). Contemporary Accounting PDF. Australia: Cengage Learning Australia.

Briscoe Group Limited. (2019). Annual report. Retrieved 3 October, 2019, from http://briscoegroup.co.nz/wp-content/uploads/Annual-Report-YE-Jan-2019.pdf

IFRS Conceptual Framework. (2018). Conceptual Framework for Financial Reporting. Retrieved 3 October, 2019, from https://www.ifrs.org/-/media/project/conceptual-framework/fact-sheet-project-summary-and-feedback-statement/conceptual-framework-project-summary.pdf

Makoujy, R. (2010). How to Read a Balance Sheet: The Bottom Line on What You Need to Know about Cash Flow, Assets, Debt, Equity, Profit...and How It all Comes Together. UK: McGraw Hill Professional.

Wahlen, J., Baginski, S.P. & Bradshaw, M. (2010). Financial Reporting, Financial Statement Analysis and Valuation: A Strategic Perspective. US: Cengage Learning.


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