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Article: The sensibility of principles-based accounting standards: financial accounting would be more accurate if there were fewer rules--including fewer rules for valuing stock options.(Opinion)
- Article from:
- Strategic Finance
- Article date:
- May 1, 2004
- Author:
CopyrightCOPYRIGHT 2004 Institute of Management Accountants. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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The Financial Accounting Standards Board (FASB) had been trying to resolve the issues about measuring the expense of stock options long before it published its Proposed Statement of Financial Accounting Standards, "Share-Based Payment," in March. But instead of wrangling over valuation details, we believe the Board should avoid this type of rules-based accounting. Instead, it should issue a principle of accounting for stock options and let the accountants deal with the specifics of how to measure the size of the expense. For that matter, the FASB shouldn't issue rules at all--only principles.
MIND OVER MATTER
Nowhere have we seen the idea of rules- vs. ...