I recently saw a column that said GAAP - Generally Accepted Accounting Principles - should really be thought of as POOP - Pitifully Old and Obsolete Principles. The column makes a good point.
Consider the age of the following standards:
- Long-term contracts - ARB 45 - 1955
- Inventory and cost of goods sold - ARB 29 - 1947
- Treasury stock - ARB 1 - 1939
- Research and development - SFAS 2 - 1974
Think about the changes in the business world since just 1974. The PC revolution and the Internet have dramatically changed business processes. All sorts of technologies have emerged and changed the ways of business.
But many accounting principles are stuck in another age.
The Financial Accounting Standards Board is aware of this. Whether or not movement in improving financial reporting actually occurs is another story.