Rules-based GAAP Principles-based GAAP
red ball More specific requirements red ball Sets forth broad objectives and fundamentals
red ball More detailed implementation guidance red ball Requires professional judgment for implementation
red ball May result in more comparability red ball More flexible
red ball May foster “check-the-box” mentality red ball May result in more divergence in practice
red ball Results in "Bright-lines"a
 red ball Results in "Fuzzy-lines"
a A bright-line rule (or bright-line test) is a clearly defined rule or standard composed of objective factors, which leaves little or no room for varying interpretation. The purpose of a bright-line rule is to produce predictable and consistent results in its application.



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