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Chapter 20 Accounting Issues in the New Economy The United States, in common with many other countries of the developed world, has entered a new economic era, where value derives principally from intangible assets like information and knowledge rather than tangible assets such as machinery and equipment. Generally Accepted Accounting Principles, as applied in the United States, were developed in an era when tangible assets were the principal source of value and rely on cost to determine balance sheet value. With the advent of the knowledge economy, traditional cost-based accounting standards and procedures cannot adequately establish the value of the intangible assets on which companies now rely to generate revenues and profits. Accordingly, new methods must be developed to allow investors and others to assess the value of intangible assets. |