An accounting for intangible assets that informs valuation

Richard Barker and Stephen Penman

Chapter 7 in Handbook on Intangibles, 2026, pp 143-151 from Edward Elgar Publishing

Abstract: The valuation of intangible assets and the accounting for those assets are issues very much at the fore among both valuation and accounting practitioners and the professional and regulatory bodies prescribing practice. Recognizing that accounting aids valuation, this chapter asks: What is the appropriate accounting for intangible assets for valuing firms with intangible assets? Valuation is based on expected cash flows with a discount for risk. So the chapter outlines an accounting for intangibles that conveys both expected cash flows and the risk to expected cash flows that determine the discount rate. In contrast to the common demand to recognize intangible assets on the balance sheet, the proposed accounting calls for a conditional capitalization that conveys the value-relevant information, implying a particular financial presentation and further disclosures.

Keywords: Intangible assets; Valuation; Investment risk; Capitalization of intangibles; Financial statement presentation; Disclosure (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035306367
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