Decision usefuness and GAAP
... Staubus wrote in his book “The decision-Usefulness Theory of Accounting”: “The purpose of accounting is to provide information which will be of assistance in making economic decisions. As such, an entity should provide the most objective information to the decision-makers.” “The key to decision-usefulness theory is the decision-usefulness objective.” Ideally, the decision-usefulness theory should be a useful and practical objective for creating Generally Accepted Accounting Principles (GAAP). ... Accounting bodies have adopted a decision-usefulness approach to financial reporting with the main focus on investors and creditors. ... From this point of view, decision usefulness is not a useful objective for creating GAAP. ... The nature of financial statements limited the usefulness of decision-usefulness theory for creating GAAP. ... For example, under decision-usefulness an entity should provide all information that relevant to the user such as a lawsuit the entity is pending. ... From the above discussion, here comes my conclusion: Decision-usefulness is a ideal method, but it is not a realistic, useful, practical objective for creating GAAP for the following reasons. ... Decision-usefulness theory requires more accurate information. ... Decision-usefulness theory is costly.