One area where the rules have not kept up is the accounting for intangibles, including software, brands and research and development.
The accounting rules treat intangibles largely as expenses, not as investments.
These rules have not changed meaningfully since the late 1970s and, as a result, the key drivers of today’s leading companies are often invisible on their financial statements: think Apple’s iOS and Novo Nordisk’s blockbuster weight loss drugs – key company components that are both largely absent from the balance sheet.
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