Questions in Search of Answers
by JULIUS W. PHOENIX, JR. Partner, Executive Office
Presented before The Accounting and Taxation Symposium, North Carolina Association of Certified Public Accountants, Chapel Hill — November 1964
When I graduated from the University of North Carolina, I was not aware of many unresolved questions about accounting and I was sure I had the answers to those I did know about. The older I get, however, the more I am aware of questions and the less certain I am of the answers. Frankly, I am concerned about many of the questions we face because we may attempt to answer them without really understanding what the basic issues are.
One might ask why there are so many unresolved questions today. It may be that technological advances and broad social, economic, and political changes have so affected business that we must seek answers to new questions. It may be, on the other hand, that we are seeking better answers to the same old questions because the dollar amounts are now bigger. I think it is fair to say that both of these factors contribute to the questions that face us today.
QUESTIONS BEING CONSIDERED IN THE AICPA
Without suggesting solutions, I shall outline some of these questions that are in various stages of consideration by the Accounting Principles Board and the Research Department of the American Institute of Certified Public Accountants. If I appear to be offering solutions instead of posing questions, please keep in mind that questions are made clearer by arguments
concerning possible solutions.
Technological advances have increased our problems in accounting for research and development costs. Here we must decide whether to defer these costs or to charge them against income when they are incurred.
We must decide whether basic research should be treated differently
from applied research and whether both should be treated differently
from development costs.
Somewhat similar questions are being explored separately for the extractive industries, where product costs are difficult to determine, and where the same costs may produce more than one product.
Social changes with an increased emphasis on employee welfare have magnified problems that have been with us for years. Thus, we are still trying to resolve how to account for pension costs. I shall have more to say about this later.