There have been excellent arguments articulated for presenting all of a company’s intangible assets on the balance sheet: transparency, C-level attention, etc. Now Professor Baruch Lev (NYU) has urged the move to trigger the investment that will be required to pull the nation’s economy out of its current state.
As reported in IAM-Magazine, Lev proves his point with The Economists’ reaction to the U.S. economy after the Bureau for Economic Analysis decided to recognize software as an investment reflected on national accounts. “The Economist ran an article saying we now have a different view of the US economy.” What was changed was current accounting. Until changed, the full value of many businesses will remain hidden, and potential investors will remain overly cautious.