FASB and the IASB versus J.R. Hicks

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB), in asserting their preference for the “asset and liability view” of income over the “revenue and expense view,” have mistakenly invoked J.R. Hicks as grounding their position. In fact, Hicks argues that income based upon the “asset and liability view” is irrelevant when windfalls are present and that non-objective analysis is required to remove such windfalls to obtain an income measurement suitable for decision making. Hicks' objective is actually aligned with the intention of the “revenue and expense view.” Given that both FASB and the IASB hold Hicks as a foundational authority, it is incumbent upon both of them to pursue accounting standards that remove windfalls as he suggested.