Accounting for intangibles: The great divide between obscurity in innovation activities and the balance sheet

Wyatt, Anne 2001, Accounting for intangibles: The great divide between obscurity in innovation activities and the balance sheet, Singapore Economic Review, vol. 46, no. 1, pp. 83-117, doi: 10.1142/S0217590801000243.


Title Accounting for intangibles: The great divide between obscurity in innovation activities and the balance sheet
Author(s) Wyatt, AnneORCID iD for Wyatt, Anne orcid.org/0000-0002-9421-9040
Journal name Singapore Economic Review
Volume number 46
Issue number 1
Start page 83
End page 117
Total pages 35
Publisher World Scientific Pub Co Pte Lt
Publication date 2001-12-01
ISSN 0217-5908
1793-6837
Summary This paper analyses descriptive data from a discretionary accounting setting and several generic properties of innovation activities to explain why intangible assets are grossly under-recognized in company balance sheets. Existing literature and publicly available data indicates the increasing significance of intangible investment in the growth and development of firms and the stock of knowledge. However, a systematic framework to reliably quantify the stock of intangible assets remains elusive. This paper contributes to the debate surrounding recognition of intangible assets by demonstrating how economic attributes of intangible assets arise from generic features of innovation activities, and identifying the nature of the mis-match between accounting principles and the economic attributes of intangible assets which serves to reduce the relevance of accounting information. It is argued that accounting has become inwardly focused on the internal consistency of accounting relative to an outdated set of principles. Before an accounting asset can be recognized financial reporting systems typically require a 'cost' verifiable from a past transaction which the firm can directly link to expected future revenues. This narrow accounting approach is inconsistent with the properties of intangible investments in the knowledge-based economy.
DOI 10.1142/S0217590801000243
Indigenous content off
Field of Research 14 Economics
HERDC Research category C1.1 Refereed article in a scholarly journal
Persistent URL http://hdl.handle.net/10536/DRO/DU:30141214

Document type: Journal Article
Collections: Faculty of Business and Law
Department of Accounting
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