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 that:
A) 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 that 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 that are not.

Question

Quizplus · Accepted Answer

A blanket rule requiring all expenditure of a particular type to be written off as incurred 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. This can lead to a lack of transparency and accuracy in financial reporting, making it difficult for investors to make informed decisions. Therefore, option B is the best choice. Option A is incorrect as it is irrelevant to the given scenario. Option C and D are also incorrect as they are not related to the problem with the blanket rule mentioned in the question.

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