The Problem with a "Blanket Rule" Requiring All Expenditure of a Particular

question 19

Multiple Choice

The problem with a "blanket rule" requiring all expenditure of a particular type to be written off as incurred (e.g.,expenditure on research) ,is:

• A) that it is too much like US GAAP.
• B) it does not enable readers of financial reports to differentiate between entities that have generated future economic benefits from particular activities and those who have not.
• C) it does not enable readers of financial reports to differentiate between entities that have managed their earnings and those who have not.
• D) it does not enable readers of financial reports to differentiate between entities that are going to continue to be successful and those who are not.
• E) it does not enable readers of financial reports to make their own judgements about the future worth of the entity.

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Definitions:

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