The value attached to intangible assets has increased manifold in the current era of knowledge economy. Intangible assets are a major tool for firms to build competitive advantages. As firms now become more knowledge and information-based, intangible assets will comprise a significant percentage of the overall value of businesses. It's the intangible assets that create value and decide a firm's future growth potential. Although all intangible assets are very valuable and critical to a firm, according to current accounting practices all of them can't be recognized as assets in the balance sheet of a firm. This article discusses many issues of IAS 38 for intangible assets.

Intangible assets are the assets that do not have physical existence. Common examples of intangible assets are brands, patents, copyrights, goodwill, employees' skills, organization culture, customer relationship, etc. All these intangible assets are very dissimilar in nature but they still have one element in common. They create value for a firm and their size and nature determine a firm's future earning potential in terms of value creation. Although all these intangible assets are very valuable and critical to a firm, according to current accounting practices, all of them can't be recognized as assets in balance sheet of a firm.

The value attached to intangible assets has increased manifold in current era of knowledge economy. The book value reported by many publicly-listed companies is significantly less than the market value of stock. Stock market value is derived, to a large extent, from assets that do not directly appear on the balance sheet of a firm. This highlights the growing significance of intangible assets and their accounting practices. In the current economy it's the intangible assets that create value and decide a firm's future growth potential. Therefore, the value of a firm can't be perfectly measured by the value of its physical assets only.

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