Many outside the United States claim that a problem with U.S. GAAP is the there are too many rules. They argue for principles-based accounting standards in which the broad principles of accounting are emphasized and less emphasis is placed on detailed implementation rules. Americans counter that IFRS may lack quality and rigor. Additional rules are necessary to provide adequate guidance to users.

Required:
1. Explain the difference between principles-based and rules-based accounting standards.
2. What are the advantages of principles-based standards?
3. What are the advantages of rules-based standards?
4. Do you think that future international accounting standards will need to be more principles-based or more rules-based?