Thesis: Inclusive Book Value

Sample Thesis Paper

Another measure of book value is the inclusive book value. The inclusive book value unlike the tangible book value includes intangible assets that are owned or controlled by the company. All business has some of intangible assets that are not usually reflected in the financial statements.  Some analysts have even argued that the assets that are not reflected by the financial statements might even be the most important in the business.

Examples include the human resources, intellectual property, R & D plans, goodwill and rights such as easements (Copeland et al. 2000). Most businesses cannot exist without some of these intangible assets. The importance of assets such as the human resources cannot be overstated. However the accounting theory has not developed to capture these assets. In some businesses such as service business the value of tangible assets may be relatively less than the value of intangible assets. The inclusion of the intangible assets in the calculation of the book value makes the figure more relevant and closer to the real value of the business. However the reliability of such a value reduces considerably. This is because valuation of intangible assets is less certain that the valuation of tangible assets. Judgment is applied which may make the values unreliable.

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