Which of the following is NOT an acceptable justification for departing from GAAP?

• A. Industry practice supports reporting in a different way
• B. The substance of the transaction is better reflected by not strictly following GAAP
• C. The transaction is immaterial
• D. GAAP compliance would be more expensive

Answer: (D)

The main idea here is that GAAP should be followed to present a faithful and comparable view of financial reality, and departures aren’t justified by cost or convenience. Departing from GAAP because compliance would be more expensive is not acceptable; you can’t override GAAP with cost concerns.

If industry practice supports reporting in a different way and that method still aligns with GAAP and is appropriately disclosed, or if the substance of the transaction is better reflected by a presentation that deviates from strict GAAP (when supported by the principles and disclosure requirements), or if the transaction is immaterial so the impact on financial statements is negligible, those situations may be considered acceptable under proper professional judgment. The key point is that departures must be justified by GAAP-consistent reasoning and appropriate disclosures, not by cost alone.