Time for a Revolution in the Reporting of Intangible Assets in Research Sector!
Intangible assets such as brands, people, know-how, relationships and other intellectual property make up a greater proportion of the total value of most businesses than tangible assets such as plant, machinery and property. However, as important as these intangible assets are, many directors, analysts, investors and other stakeholders do not have an adequate understanding of how intangible assets impact the value of businesses.
From the perspective of analysts, pricing shares with insufficient information about entity assets leads to a broader, less helpful spread of values. Investors acting on the incomplete information (and the analyst reports that draw upon it) are in effect, forced to act with one eye closed.
In the last twenty years of exponential enhancement and valuation of intangible assets on the market, unfortunately the accounting standards and practices have not reflected and followed this substantial change.
Now there is clearly a strong interest to all that we correctly a revaluation of all entity assets, including tangible assets, acquired intangibles in previous years and internally generated intangibles, would be a boon for boards, accountants, investors and analysts. All stakeholders of financial accounts want to see a radical change in the antiquated way intangible assets are reported. The transparency and clarity this would afford would enable boards to make more effective use of their assets, accountants to have a truer picture of asset values, and investors and analysts to more accurately price shares.