Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 5 - Balance Sheet and Statement of Cash Flows - Review and Practice - Questions - Page 237: 8


Ideally, some of the items that are of great value to technology companies such as IBM and Intel include: -The value for research and development (i.e. new products that are being developed but are not marketable). -The value of intellectual capital of the company's workforce (i.e. the ability of the company's employees to come up with new ideas as well products in the fast changing technological industry). -The value of the company's reputation or rather brand name (e.g. the Intel logo) in most cases, the reason as to why the value of these items is not included in the balance sheet is because they lack a faithful representation of the estimates of the future cash flow that will generate these assets and the ability to control the use of the asset as in the case of the employees.

Work Step by Step

Generally, its always difficult to measure the expected future benefits as well the control of the use of a specific item which are essential elements of the definition of an asset.
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