Intellectual Capital Report

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Reporting on intellectual capital Intellectual Capital importance has shown a huge growth, research has exposed that 50% to 75% of the market value of companies reflects intangible assets such as innovation processes, patents, brands, trademarks, customer databases, etc. Traditional Balance sheet only reports the value of physical and financial assets and accounting system is not equipped to deal with Intangible assets. Shareholders have to make their own assumptions on how intangible assets have changed in value during the year. An Intellectual Capital Report helps in eliminating this problem, and in demonstrating the real value of IC. An IC Report is a statement of changes in the company’s Intangible Assets much like a Balance Sheet is a statement of Changes in the Company’s Physical and Financial Assets. Unlike physical and financial assets, intangibles cannot be valued directly. Intangibles are represented by proxies called indicators. The change in values of these indicators during the reporting period indicates the growth or decline in intangibles during the period. Accordingly lots of models and researches have been developed to for reporting intellectual capital of which the Danish Guidelines, the Austrian Research Centre’s model, the balanced scorecard, the Skandia Navigator, and the CVH are some. Below is a brief about the Austrian Research Centre’s model which has developed its own method for reporting on intellectual capital and has done so since 1999. As a research organization, it is particularly important that it can communicate its performance against a set of knowledge goals to its stakeholders. Because it is financed with public funds, it is important to the organization to be transparent as to how the money is used. ARCS have published five intellectual capital reports and the reports now show a good degree of continuity. The reports are based on

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