Intellectual Property Valuation and Accounting

Jeffrey E. Jarrett, University of Rhode Island


Reporting revenue from intellectual property is a problem of revenue recognition. Although current reporting standards may prescribe rules and regulations for such items as matching and revenue recognition or what is often referred to as the realization postulate in accounting. Financial reporting is the method by which accountants aid business in recognizing their accomplishments. Recognizing future performance is a goal by most reporting methods are merely designed to recognize past cash movement and equivalents as part of the history of a firm but also to evaluate present performance by traditional reporting methods? We evaluate these methods based on traditional accounting theory to facilitate the improvement in accounting methods. We define Intellectual Property (IP) as any product of intellect that the law protects from unauthorized use by others. These items include patents, copyrights, trademarks and trade secrets are considered to be the products of intellectual property. To account for these items is a serious problem and is the main subject of this study.