Intangible Capital Expenditure
This paper is an excerpt from Intangible Capital: Putting Knowledge to Work in the 21st Century Organization being re-released for readers from the integrated reporting movement.
It will challenge you to consider how to apply a well-known accounting convention, capital expenditure, to today’s companies. Lack of this kind of approach for modern assets like data, systems, knowledge and networks is a big driver of the 87% intangible information gap between corporate value and the tangible net worth of the average public company in the U.S.
- Why intangibles aren’t on the balance sheet today
- The consequences of the intangible information gap
- How accounting data can be used to close the intangible information gap
- How intangibles relate to questions of value and valuation
This paper does not suggest changes in GAAP. Rather, it provides a simple framework for a management accounting report that can be produced by companies of every size.