The principles of accrual accounting took shape when most firms operated with physical assets and produced physical products (physical firms). The global economy in general, and the U.S. economy in particular, has shifted toward firms that function with intangible assets and sell knowledge-laden...

Based on the current U.S. GAAP, internally developed intangibles are not included in reported assets. Omission of an increasingly important class of assets reduces the usefulness and relevance of financial statement analysis, conducted using book value. Recent studies attempt to overcome this...