We all know the implications of a ‘second set of books’: The implication is that a firm or operating concern publishes one set of ‘official’ finances, typically publicly or to government officials in order to pay taxes; and keeps privately a second set of finances for some other purpose – perhaps the re-distribution of profits using some informal or some non-standard (i.e. illegal) method. I remember reading about the “gangster” era where two sets of books were kept.  But there is in fact a new and emerging reason why it may be practical to record a second set of “books” – for a good, legal reason.

In Tuesday’s US print edition of the Wall Street Journal there was an interesting article titled, “Codes for Valuation Experts” that explains how some consulting companies help organizations value their non-traditional assets such as patents, trademarks, and customer relations.  Many of these assets are recognized by you and me as business assets.  The rights to a patent is quite clear; maybe a firm could sell off its patents for cash.  In such a deal the buyer is a acquring the right to the use of the patent, not really the document itself.  But the principle is clear: there is value in information assets, not just physical assets.

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