In Statement of Financial Accounting Standards No. 95, the Financial Accounting Standards Board (FASB) recommended but did not require that companies use the direct method. In Appendix B, Paragraphs 106–121, of the standard, the FASB discussed its reasons for this recommendation.

Required

Obtain a copy of Standard No. 95 and read Appendix B Paragraphs 106–121. Write a brief response summarizing the issues that the FASB considered and its specific reaction to those issues. Your response should draw heavily on paragraphs 119–121.