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This chapter discusses situations where a firm cannot be valued as a going concern. In such cases, value of all assets, both tangible and intangible, are viewed as being put to their most productive alternative uses. In this context, their earning power is assumed to be higher in some applications other than the current business where they are employed, so their effects on the modified income statement are disregarded. The chapter focuses on an extended Balance Sheet that includes all intangibles.

The core of management in the knowledge economy is the development and deployment and utilization of intangible assets, the most significant being (tacit) knowledge, competence, and intellectual property. Intangible assets are the main basis of competitive differentiation and successful strategies in many sectors, as manifested in the growing literature on issues such as loyalty, intangible assets, complementary assets, appropriability, and technological know‐how. This chapter discusses some of these important issues, the nature and development of dynamic capabilities, and draws implications for understanding the theory of the business firm.

This chapter talks about several justifications for the endowment of intellectual property rights. These justifications are variously focused upon the activities of the creator of an intangible asset, its would-be user, and the community in which the creator operates. It explains that none of these justifications offers a single over-arching theory of intellectual property law. However, these justifications would altogether encompass the theoretical basis upon which intellectual property rights are granted, and an understanding of their relative strengths is important to the on-going development of the law in a coherent and principled way.

One of the principal objectives of a finance manager is to maintain the dynamic stability of current assets in response to the level of capacity utilisation. The dynamism can be maintained only when the quality of current assets is such as to ensure their fast movement by continuous replacement, so that they remain current. This chapter critically examines the major items of current assets. It discusses in detail cash and bank balances, sundry debtors/receivables, inventory valuation, various types of stocks/inventories, loans and advances, and intangible and fictitious assets.

This chapter contrasts shariah-compliant and shariah-based Islamic finance, arguing that their difference is ground in different methodologies for creating Islamic financial devices. In documenting debates over the religiosity of intangible assets, the chapter argues that these two approaches reflect fundamentally different conceptualizations of the relationship between Islamic and secular knowledge. The chapter shows how the formalist approach used in shariah-compliant Islamic finance lends itself to relatively easy replication of conventional financial instruments. The chapter also documents contemporary experiments in Islamic finance as experts seek to synthesize shariah-based instruments, which are viewed as having more religious credibility and authenticity.

Chapter 3 discusses the core assets that provide the capacity to innovate. Tangible assets are usually fixed and can provide the firm with the potential to innovate but may also create barriers to innovation by their fixed nature. This is the most visible asset that any company has, and can be sold or transferred. Financial assets are the most fluid of the assets discussed. These provide great opportunity for service innovation as they can be transformed into the other assets required as long as they are large enough. Intangible assets, such as intellectual property rights and brand equity, can be hugely influential in the success or failure of innovation within the service economy. Despite the importance of intangible assets they are often difficult to identify and quantify.

Asset mapping was the most important methodological tool used in the Creative Citizens project. The history and best practice of this technique, is described, along with its adaptation to this project. Initially understood as a tool for capturing the values that drive creative civic actions and the value thereby generated, here the technique is applied for the dual purpose of supporting research and facilitating collaborative creation, with a focus on intangible assets such as knowledge, capabilities and skills, as well as social and cultural relationships. This approach innovated by examining the value of media assets in community and personal asset maps. We concluded that intangible assets around people, groups and organisations are the main carriers of untapped potential.

This chapter provides a unified framework for the measurement of capital that addresses many of the issues and topics covered in the volume. It discusses some of the problems involved in constructing price and quantity series for both capital stocks and the associated flows of services when there are general and asset-specific price changes in the economy. This chapter also reviews the standard methods for measuring capital, examines a range of alternatives for the treatment of depreciation, and explores the role of quality change and how intangible assets stocks could be measured.

The things that make up property may be perceived and treated in various ways. There are physical differences between them. There are also different ways in which we regard them. Property law defines and classifies particular types of property, and then, depending on their most significant features, lays down the formalities needed for their transfer or acquisition, and provides certain procedures for their protection. An obvious overall division is into tangible objects and intangible assets. Examples of tangible (or material) objects are land, goods, living creatures, while examples of intangible assets are documentary intangibles such as commercial paper, investment securities such as stocks and bonds, undocumented intangibles, intellectual property, money, funds, and capital and income.

This chapter discusses issues concerning the measurement of trade in services. It analyzes the size of exports and imports of service, and their composition, by type of service. This chapter also evaluates how fast the growth in service exports and imports has been, relative to trade in goods and to the production of services. It also suggests that the problems in the measurement of service exports and imports are caused by the ambiguities in defining the location of service production, particularly service production based on intangible and financial assets.

This introductory chapter explains the contents of this volume which is about the measurement of capital in the new economy. The chapters in this volume are revised or edited versions of papers presented at the Conference on Research in Income and Wealth entitled “Measuring Capital in the New Economy” held at the Federal Reserve Board in Washington D.C. on April 26–27, 2002. The topics discussed include the challenges of how to measure physical capital accumulation and the contribution of intangible assets in an economy that is increasingly dominated by high technology capital and undergoing change brought about by advances in information technology.

This chapter investigates the impact of taxes on royalties and the transfer of the intangible assets of U.S.-based multinational corporations (MNCs) abroad. It describes the strategies of MNCs for relocating their intangible assets abroad and demonstrates how firms have interpreted two important tax regulations to create these new strategies. This chapter also discusses some successful tax-saving strategies of MNCs and explains the concepts of hybrid structures and cost-sharing agreements.

We live in an age of paradox. Systems using artificial intelligence match or surpass human-level performance in more and more domains, leveraging rapid advances in other technologies and driving soaring stock prices. Yet measured productivity growth has declined by half over the past decade, and real income has stagnated since the late 1990s for most Americans. We describe four potential explanations for this clash of expectations and statistics: false hopes, mismeasurement, redistribution and implementation lags. While a case can be made for each explanation, we argue that lags have likely been the biggest contributor to the paradox. The most impressive capabilities of AI, particularly those based on machine learning, have not yet diffused widely. More importantly, like other general purpose technologies, their full effects won't be realized until waves of complementary innovations are developed and implemented. The adjustment costs, organizational changes, and new skills needed for successful AI can be modeled as a kind of intangible capital. Some of the value of this intangible capital is already reflected in the market value of firms. However, going forward, national statistics could fail to measure the full benefits of the new technologies and some may even have the wrong sign.

The scholarly and management consulting literatures routinely tell companies what they should do in order to create a good reputation. However a problem with much of this advice is that it is not supported with reliable evidence or it is routinely violated by companies that have a good corporate reputation. This chapter explores myths like corporate transparency and being more socially responsible.

This chapter discusses financial assets which also receive protection under the tort of law. The assets discussed are expectancies, trade values, and monetary wealth. Expectancies come in two forms: the contractual and the non-contractual. A contractual expectancy consists of the chance or expectation of entering into a financially advantageous contractual agreement in the future. Non-contractual expectancy, on the other hand, consists of the chance or expectation of making a gain in the future by some means other than contractual agreement. The second group of assets discussed herein consists of trade values or intangible assets, the product of someone's effort and skill which can be exploited to make financial gains. The last group of assets is comprised of monetary wealth in all its forms. The interest being protected here is an interest in the preservation of the financial status quo.

This chapter examines the case law governing the situations where the holder of a common law right in some asset can claim the traceable proceeds of that asset. It analyses the leading cases that recognise such a possibility and argues that these demonstrate that tracing is possible wherever one person has a legal power to deal with the assets of another, a duty not to exercise that power, and an ability to effectively exercise the power in breach of duty.