Information Perspective and Measurement Perspective on Financial Reporting and Decision Usefulness Research Paper

Open, View, and/or
Download this Document

Total Length: 882 words ( 3 double-spaced pages)

Total Sources: 1

Page 1 of 3

2010 annual report of WestJet and discusses their information and measurement approaches on financial reporting.

The following items from the annual report follow the measurement perspective on decision usefulness: Frequent Guest Program FGP), financial instruments and compensation plan. WestJet has "a frequent guest program that allows guests to accumulate credits that entitle them to a choice of various rewards, primarily discounted travel. Revenue received in relation to credits issued is deferred as a liability at fair value until a reward is ultimately utilized, at which time it is recognized as guest revenue. Fair value is management's estimate of the expected awards for which the credit will be redeemed and is reduced by the proportion of credits that have been redeemed relative to the total number expected to be redeemed" (WestJet 67).

Also included in the FGP is WestJet's co-branded MasterCard " with the Royal Bank of Canada (RBC). RBC issues FGP credits to cardholders as a percentage of their total retail spend. The fair value of these credits is deferred and recognized on redemption as described above. Ancillary revenue from the issuance of FGP credits on the credit card is measured as the difference between the cash received and the fair value of the credit and is recognized in other revenue on their issuance. Revenue related to new cards issued is recognized in other revenue immediately upon activation" (WestJet 67). These items follow the measurement perspective because they are reported at their fair market value, as opposed to historical cost. The fact that WestJet tries to estimate the amounts is an attempt to assist investors in predicting firm value, including these items.

Stuck Writing Your "Information Perspective and Measurement Perspective on Financial Reporting and Decision Usefulness" Research Paper?

View All Our Example Information Perspective and Measurement Perspective on Financial Reporting and Decision Usefulness Research Paper

Have A Custom Example Essay Written



WestJet describes the following financial instruments, also reported using measurement perspective, as follows: "A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument to another entity. Financial assets and financial liabilities, including derivatives, are recognized on the consolidated balance sheet at the time the Corporation becomes a party to the contractual provisions. Upon initial recognition, financial instruments are measured at fair value and, for the purpose of subsequent measurement, financial instruments are allocated to one of the following five categories: held-for-trading, held-to-maturity, loans and receivables, available-for-sale or other financial liabilities" (WestJet 67). These items are also measured at fair value. T his valuation method again assists investors in their ability to analyze and predict the future firm performance, which is a characteristic of measurement perspective.

WestJet's stock-based compensation plan is also reported according to the measurement perspective. WestJet describes their treatment of grants: "Grants under the Corporation's stock-based compensation plans are accounted for in….....

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Information Perspective And Measurement Perspective On Financial Reporting And Decision Usefulness" (2011, October 04) Retrieved May 20, 2024, from
https://www.aceyourpaper.com/essays/information-perspective-measurement-perspective-116992

Latest MLA Format (8th edition)

Copy Reference
"Information Perspective And Measurement Perspective On Financial Reporting And Decision Usefulness" 04 October 2011. Web.20 May. 2024. <
https://www.aceyourpaper.com/essays/information-perspective-measurement-perspective-116992>

Latest Chicago Format (16th edition)

Copy Reference
"Information Perspective And Measurement Perspective On Financial Reporting And Decision Usefulness", 04 October 2011, Accessed.20 May. 2024,
https://www.aceyourpaper.com/essays/information-perspective-measurement-perspective-116992
   

Open, View, and/or
Download this Document
order custom essay example