A considerable amount of concern has developed regarding application of accounting standards for large publicly traded companies and smaller private companies. This has led to the terminology known as "big GAAP" and "little GAAP" because of the opinion that different accounting and reporting should apply to large and small companies. This topic has been debated and studied off and on over the past 30 or 40 years with no resolution. Issuance of some recent standards has stirred the debate, along with the complexity and hardship for small public companies to comply with the new regulations. Some businesspeople and accountants felt that FASB No. 150: Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equities and FASB Interpretation No. 45 and No. 46 were in many instances not applicable to smaller privately held companies. Financial Interpretation No. 45 relates to guaranteeing indebtedness of others and No. 46 deals with consolidation of variable interest entities. Both of these interpretations were pronouncements that arose out of the Enron scandal. The above accounting principles are illustrative but not inclusive of all the situations where differences of opinion might arise.

Typically, GAAP is meant to apply across the board for all companies without distinguishing between private and public entities. The FASB is the accepted standard setter for both public and private companies and does not provide for different recognition and measurement principles. Included in GAAP are the following basic core elements:

• Recognition of assets, liabilities, equity, revenue, and...