E1-7. Rules- versus Principles-Based Accounting. Review the following statements and indicate if the statement is referring to a principles-based or a rule-based accounting standard. Statement: "An accountant will use a particular accounting Principles-Based or Rules- standard only if... Based Accounting Standard a. ...the length of a contract covers substantially all of the useful a. Principle Base life of a plant asset. b. ...the number of new common shares a firm issues is equal to b. Rule Base 20% of the previously outstanding shares. c. ...a corporation owns over 50% of the voting shares of an c. Rule Base affiliate company. d. ...a corporation has the ability to control the operating and d. Principle Base financing activities of an affiliate company. e. ...it is more likely than not that a company's tax position will be e. Rule Base sustained upon examination by the Internal Revenue Service. f. ...the sum of the undiscounted future cash flows from the use of f. Rule Base a plant asset is less than its carrying value