The intangibles debate

What is the main reason for the gap between stock market value and net book value of businesses?

Clever accounting

The value of intellectual property

Errors in accounting

Intangibles

Which intangible sources of value are never going to be able to be recognised as assets?

Workforce and research and development spend

Workforce and corporate culture

Corporate culture and exploration for resources

Corporate culture and intellectual property

Which of the following was not a subject of a report commissioned by ACCA on intangibles?

R&D costs

Staff training costs

Software development costs

Exploration costs for extractive companies

How many companies in the study capitalised a software asset?

Around half

Around half of 64 percent of companies in the study

64 percent

64 percent of around half of the companies in the study

Which of the following countries had few companies referring to software development in their accounts?

The UK

Mexico

Japan

Mainland China

What is wrongly implied by including research and development as neither an expense nor an asset?

That companies consider R&D spend to be competitively sensitive information

That companies consider being explicit about R&D spend detrimental to their financial performance

That companies make seemingly no material investment in developing new products

That companies wish to obscure their investments in R&D

What kind of companies tend to capitalise intangibles more?

E-commerce companies

Extractive companies

Pharmaceutical companies

Software companies

What percentage of extractive companies tend to capitalise costs of exploration and evaluation of new resources as an intangible asset?

50 percent

80 percent

65 percent

Over 80 percent

What likely conclusion can be drawn from the reports?

The investment in intangibles seems likely to be significantly understated by financial reporting

We need a new financial standard for reporting intangibles

Companies who do R&D are not being honest

Only extractive companies are being honest

What likely difficulty might arise for investors as a result of companies not capitalising intangibles?

It becomes harder to compare companies with intangible assets like for like

They have to tailor their investment strategy by country

Companies may be hiding failures in R&D, making them risky investments

They have to tailor their investment strategy by type of intangible

The intangibles debate

What is the main reason for the gap between stock market value and net book value of businesses?

Which intangible sources of value are never going to be able to be recognised as assets?

Which of the following was not a subject of a report commissioned by ACCA on intangibles?

How many companies in the study capitalised a software asset?

Which of the following countries had few companies referring to software development in their accounts?

What is wrongly implied by including research and development as neither an expense nor an asset?

What kind of companies tend to capitalise intangibles more?

What percentage of extractive companies tend to capitalise costs of exploration and evaluation of new resources as an intangible asset?

What likely conclusion can be drawn from the reports?

What likely difficulty might arise for investors as a result of companies not capitalising intangibles?

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