Intangible assets threaten to collapse the economy

The concept of intangible assets is one of the most difficult for people who begin to study accounting. At first, the fact that the enterprise's balance sheet keeps something that does not actually exist is clearly perplexing. However, over time, during the study of accounting, with this term get used to, and it is perceived as a matter of course.

In fact, accounting for intangible assets is fairly straightforward, so it seems to many that this is not a problem at all. However, intangible assets are a problem and the problem is very serious. In order to find in this concept of the pitfalls, it is enough to recall your first impression of acquaintance with intangible assets. You were absolutely right in thinking that it was a little ridiculous. In fact, it is impossible to accurately estimate how much air is worth, and what profit it can bring to the enterprise in the future.

But can we call "air" what in the economic literature today is considered to be almost the engine of any enterprise, as well as the entire world economy? Of course, yes. So, non-material assets are various licenses, patents, technologies, the fruits of intellectual labor, copyrights and, so-called, the reputation of the company.

Let's start with the most interesting. The reputation of the company is the value that the buyer overpaid when buying out the company's shares. That is, he could pay an absolute any amount for, say, a completely uncompetitive enterprise and write down this difference to himself an asset! Than it is fraught? The investor buys a garbage company for a lot of money. Then he begins to conduct through it all his profits, which are extracted by other companies. Profit, however, is repaid by depreciation of this very reputation, which, according to the logic of things, should not have been on balance at all. As a result, we get an absolutely legal scheme for non-payment of taxes. And from the side all looks beautifully - the investor invested money, and the enterprise has earned.

The blurring of the concept of intangible assets allows you to go even further. The owners of the company can indicate that the value of the company's brand has grown, while the enterprise has shown losses. As a result, the company is getting 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 in fact have it. How can you reliably calculate how much money was invested in the development of this or that technology? And how can you determine how much profit a company will bring to a patent?

Of course, the initiators of the introduction of intangible assets in accounting saw in this some justice. After all, company employees involved in intellectual work, in fact, create something that in the future can be used for the benefit of the company, even if it is an ordinary set of figures. However, it would be better if these expenses were immediately written off in expenses. Let and less objectively in terms of accounting, but not so attractive in terms of scammers.

The scope of fraud on intangible assets today takes such turns that it begins to threaten the existence of the economy that we are accustomed to seeing. Investments in intangible assets simply inflate a huge soap bubble, which can burst, making many large and successful companies bankrupt. Already today, the value of the brand of the largest companies is estimated ten times higher than the cost of their production capacity. But what can be sold under the brand, if there is no way to produce it?

It's time to return to assessing the assets of companies in a calculus tied to real things, otherwise we will soon face hyperinflation. For our hard-earned money, it will be impossible to buy anything other than tangible and useless assets.