A current issue before the Financial Accounting Standards Board (FASB) is whether accounting standards should be moving from rule-based standards to principle-based standards. Rule-based standards provide specific measurements guidelines that are currently used to classify investment securities (for example, less than 20%, from 20% to 50%, and over 50%). Principle-based standards rely on general principles such as significant influence or control of a company, without any more detailed guidelines. You are the chief financial officer for a large corporation, and FASB just issued a request for comment on a proposed change from the current standard to a principle-based standard. Choose the standard that best meets the business need and justify your choice. Evaluate and defend whether your choice would change if you were an investor in the company.
A current issue before the Financial Accounting Standards Board (FASB) is whether accounting standards should be moving from rule-based standards to principle-based standards. Rule-based standards provide specific measurements guidelines that are currently used to classify investment securities (for example, less than 20%, from 20% to 50%, and over 50%). Principle-based standards rely on general principles such as significant influence or control of a company, without any more detailed guidelines.
You are the chief financial officer for a large corporation, and FASB just issued a request for comment on a proposed change from the current standard to a principle-based standard. Choose the standard that best meets the business need and justify your choice. Evaluate and defend whether your choice would change if you were an investor in the company.
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