Intellectual capital is emerging as vital asset for corporates. The author discusses the Edvinsson and Malone model of valuation.Traditional financial statement information is centered on a company's ability to realize value from existing assets and liabilities. Further, most of the focus is largely backward-looking. The fundamental shift from an industrial age to information age highlights the fact that companies are now organizations based on knowledge rather than based on tangible assets alone. It has been universally accepted that while the tangible assets will contribute for the normal cash flows, it is the intangible assets like the management efforts that contribute for supernormal profits.

The huge difference between market value and book value in most of the knowledge-based industries cannot be explained with the existing assets and liabilities reported in the financial statements. Researchers and academicians have tried to account for this difference and tried to attribute it to intellectual capital or human effort or management effort or intangible assets. The focus shifted in the recent past to assign value to this intellectual capital.

Valuation of Intellectual Capital,Traditional financial statement,existing assets, ,existing liabilities,management,tangible assets alone, market value, book value, liabilities reported,financial statements, Researchers , academicians, capital effort ,human effort.