Accounting for intangibles: Financial reporting and value creation in the knowledge economy A Research Report for The Work Foundation’s Knowledge Economy Programme
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چکیده
Accounting for intangibles 2 Contents Executive Summary 3 Introduction 6 1. The macroeconomics of the knowledge economy 11 1.1 How much does the UK invest in intangible assets 11 1.2 Measuring the contribution of intangible investment to productivity 16 1.3 Macroeconomic complexities of intangible assets 21 2. Accounting for intangibles in the corporate sector 25 2.1 Identifying intangible assets within the firm 26 2.2 Accounting for goodwill 31 2.3 Accounting for research and development 36 2.4 Accounting for brand reputation 39 Conclusion 42 3. Accounting for intangibles in the SME sector 44 3.1 SMEs in the knowledge economy 44 3.2 Intangibles and the structure of the small firm 44 3.3 Intangibles reporting and management in SMEs 47 3.4 Intangibles and SME finance 48 Conclusion 51 4. Accounting of intangibles in the public sector 53 4.1 Drivers of recent interest and policy around PSIAs in the UK 54 4.2 What do we know about the value of PSIAs? 55 4.3 Accounting for and reporting on PSIAs 56 4.4 From Commercialisation to co-creation: Models of PSIA exploitation 57 Conclusion: The public value of PSIAs 60 Conclusion: The paradox of accounting for intangibles 62 C.1 'The Value Paradox' 62 C.2 Policy implications 64 References 75 Contact 82 3 Accounting for intangibles All industrialised economies are becoming knowledge based: competitive advantage and organisational performance is moving from investment in physical assets and low skilled labour to investment in intangible knowledge based assets such as R&D, design, brand equity, software, and human and organisational capital. For many organisations investment in such intangibles now equals or exceeds their investment in tangibles such as buildings, office equipment, hardware, machines, and vehicles. The latest estimates by HM Treasury show that in 2004 UK business invested nearly £130bn in intangible assets, 20 per cent more than in physical assets. In 1970 such investment was worth just 40 per cent of physical investment. 1 This is shown in the chart below. Brand equity 15% Organisational capital 17% Human capital 21% Software 17% Design 14% Other 7% R&D 9% The story is much the same in the US, the Netherlands, Sweden, and Finland – and with an important qualification also in Japan. 2 Knowledge and technological based industries as defined by the OECD now account for over 45 per cent of UK value added and employment. 3 OECD definition includes high to medium tech manufacturing; telecommunications; business, high tech and financial …
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