Part B Accounting Issues

Question 1 Measurement issue

The directors of Jayach, an Australian listed company, have received an email from its majority shareholder.

To: Directors of Jayach

From: A shareholder

Re: Measurement

I have recently seen an article in the financial press discussing the mixed measurement approach that is used by lots of companies. I hope this isnt the case at Jayach because mixed seems to imply inconsistent? Surely it would be better to measure everything in the same way? I would appreciate it if you could provide further information at the next annual general meeting on measurement base, covering what approach is taken at Jayach and why, and the potential effect on investors trying to analyse the financial statements.

Required:

Prepare explanatory notes for the directors of Jayach which discuss the issues raised in the shareholders email. You should refer to the Conceptual Framework where appropriate in your answer.