Know your worth: should you disclose undisclosed intangibles on financial statements?

Intangible assets are the non-monetary, non-physical assets of a business, including its rights, goodwill, overarching brand, and other intellectual property (IP) (i.e., patents, trademarks, copyrights, trade secrets). These types of assets represented 52% of the global enterprise value in 2018; however, 80% of that value went wholly undisclosed on companies’ balance sheets. Why are businesses’ financial disclosures largely silent with respect to intangible assets? Should companies consider reporting on such resources? Currently, the International Financial Reporting Standards (IFRS), which are commonly followed in Canada, do not allow for businesses to recognize most internally-generated intangible assets on their financial statements. Only externally-acquired assets (i.e., those obtained through a business consolidation or other M&A transaction) will necessarily crop up in financial reporting documents. As a result, regular and reliable…

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