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Is that means if we adopted principle-based, there will be a lot of different opinions, like it may involve bias. As you mentioned earlier, the spirit in one person mind may not be same with the other person mind’s spirit. Does it means it is difficult to make the consistency of the financial information because everybody has different opinion towards the meaning of “principle”. For example, I can say my principle is the students are only allowed to late maximum 5 minutes to class. However, another person can say the students are allowed to late maximum 10 minutes to class. So the meaning of principle may not be the same for everybody.
However, if we adopted rule-based, it helps to make sure the consistency of financial information because everybody must abide to the same set of law without any exceptional case. For example, students are not allowed to late for class.
Hence, rule-based and principle-based have its own advantages and limitations but just depend on how you view it.After that, I want to ask in the convergence between IFRS and GAAP. this sentence is it irrelevant for the question? the main point is only asking for what is the issue will occur rule based vs principle based ?
Thanks you sir
Your example “For example, I can say my principle is the students are only allowed to late maximum 5 minutes to class. However, another person can say the students are allowed to late maximum 10 minutes to class. So the meaning of principle may not be the same for everybody.” …
… would be better as an example if you had said “The rule is that students should not be excessively late to class” because the flexibility of that expression exemplifies the principle that students shouldn’t be late – it establishes the spirit but leaves application to the individual teachers
A rule that is specific and states that “Students shall not be late for class by more than 5 minutes” would be rules based … yes or no, right or wrong, black or white (and not 50 shades of grey) … and the application of that rule is clearly defined
This part of your post doesn’t make sense “the main point is only asking for what is the issue will occur rule based vs principle based ?” … I’m really not sure what is your question
Can you check the source of the question and ensure that you have copied it correctly?
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