The concept of intangible assets is one of the most difficult for people starting to study accounting. At first, a pronounced bewilderment is caused by the fact that something that actually does not exist is kept on the balance sheet of the enterprise. However, over time, during the study of accounting, this term gets used to, and it is taken for granted.
In fact, accounting for intangible assets is quite simple, so many people think that this is not a problem at all. However, intangible assets are a problem and a very serious problem. In order to find pitfalls in this concept, it is enough to recall your first impression of acquaintance with intangible assets. You were absolutely right, considering that it was a little ridiculous. In fact, it is impossible to accurately assess how much “air” is worth and what profit it can bring to the enterprise in the future.
But can we call “air” what is generally accepted in economic literature today as almost the engine of any enterprise, as well as the entire world economy? Yes, of course. So, intangible assets are various licenses, patents, technologies, the fruits of intellectual labor, copyrights and the so-called reputation of the company.
Let's start with the most interesting. The company's reputation is the value that the buyer overpaid when repurchasing shares in the company. That is, he could pay any absolute amount for, say, a completely uncompetitive enterprise and record the difference to himself an asset! What is this fraught with? An investor buys a trash company for a lot of money. Then it begins to spend through it all its profits, which are extracted by other companies. The profit, however, is paid off by amortization of this same reputation, which, according to the logic of things, should not have been on the balance sheet at all. As a result, we get a completely legal scheme for tax evasion. And from the outside, everything looks beautiful - the investor invested money, and the company earned.
The fuzziness of the concept of intangible assets allows us to go even further. Company owners may indicate that the brand value of the company has increased, while the company has shown losses. As a result, the company is achieving a positive result, and its shares continue to grow, although the accounting year was unsuccessful for it.
By the way, even such intangible assets, such as: certificates, licenses and technologies, which, it would seem, can have a fixed value, do not actually have it. How can one reliably calculate how much money has been invested in the development of a particular technology? And how can you determine how much profit a particular patent will bring to a company?
Of course, the initiators of the introduction of intangible assets in accounting saw this as some kind of justice. After all, company employees involved in intellectual work, in fact, create something that in the future can be used for the good of the company, even if this is a regular set of numbers. However, it would be better if these expenses were immediately written off as expenses. Although less objective from the point of view of accounting, it is not so attractive from the point of view of scammers.
The scope of fraud on intangible assets today is taking such a turn that it begins to threaten the existence of the economy that we are used to seeing. Investing in intangible assets simply inflates a huge soap bubble that could burst, making many large and successful companies bankrupt. Already today, the brand value of the largest companies is estimated to be ten times higher than the cost of their production capacities. But what can be sold under the brand if there is no way to produce it?
The time has come to return to the valuation of companies' assets in terms of real things, otherwise we will soon encounter hyperinflation. For our hard-earned money, it will be impossible to buy anything other than material and unnecessary assets.