Question

Compare and contrast the disadvantages and advantages of the principles-based versus rule based corporate governance systems.​

Answer 1

Answer:

Principles vs. Rules

The major difference between U.S. GAAP and IFRS is their differing philosophy with regard to how regulations should be constructed. IFRS accounting regulations reflect a principles-based approach where there are less bright-line rules and more qualitative guidance. Supporters of this approach argue that companies should be looking at the nature of a transaction, not arbitrary cutoffs. U.S. GAAP often takes a rules-based approach where companies classify transactions based upon numerical cutoffs. Lease accounting is a good example of the difference in philosophy. Under U.S. GAAP, a company is required to capitalize any lease when the lease contract is for greater than 75 percent of the economic life of the asset. However, under IFRS the guidance requires capitalization when the lease is for a "major part" of the economic life of the asset.

Explanation:

plz mark me brainliest.