• Liviu Cotora



ABSTRACT : Intangible assets are an economic value not because of the physical medium, but for the importance of their contribution to the intangible nature of the human activity and business resource generated by the Intangible Asset Flow. Intangible Asset exist if it generate flows of Intangible Values necessary to the Human economic activity.

The Internally generated Intangible Value is based on : knowledge, competence, partnerships and unlimited combinations of this. The intangible value flows must convert and consolidate in financial asset if they will be counted like economic resources. In another sense the tangible assets: machines, robots, space objects, seeds, vaccines, drugs, ... will during their use interact Human or with the Human controlled intelligent devices and generate new knowledge, tacit in first step and explicit next. When we understood the new knowledge and how it will make better value contribution to the Company economical wealth we structure the tacit validated knowledge in Competence and distribute him through learning sessions.

Converting Knowledge in Competence we leverage the value of the generated knowledge, diminish the cost of this value and the risk of loosing it.

The explicit knowledge we must apply him fast in the activity, to drive him in the design and functions of the tangible assets to test and consolidate the knowledge in the real life functioning. The explicit and proven knowledge will be structured in explicit descriptions, procedures, training courses, to make easy the knowledge transfer to the Humans or feed it in the intelligent devices, but faster is done more financial value will be achieved at the end.

KEYWORDS: Intangible Asset Flow, Intangible value flows, Explicit knowledge, Intangible Flow combinations wrapped in the Accounting Interface, Knowledge Flow Balance, Multi Value Flow Balance, Company Wealth Compass, Internal generated Intangible resources, INTANGIBLE Value Network, Intangible Flows Company management, Intangible Value Space, Company Intangible generating power

Big roots (domains) of Knowledge and Competence are splitting in many, very specific Flows irrigating different activities on many different processes irrigating many different tangible and intangible assets & Company productions. Analysing the Company financial performance future potential the reporting must show and make credible the Conversions from Intangible Flow of the Knowledge, Competence and Partnerships to the tangible and financial assets and Flows contained in the Financial and Income reporting.

Each Company has to design his own Intangible Flow combinations wrapped in the Accounting Interface, between the Intangible flows and IAS 38 or FASB 39 rules, so the Intangible Assets are producing permanent Flows of values measured in different crypto-currencies governed by the management level in charge with the tangible and financial reporting for that level.

The Valuation level between the crypto-currencies, corresponding to the different Projects Intangible Flows , must be the balance between the Company Value Production Strategy, Risk, Timing, Financial Value.

This Valuation Level shows the mastery and ability of the Board, Executives and Managers , clear delivery point of the art of managing and Company resilience algorithm. The conversion rates between the Tangible and Intangible Value Flows are the real time piloting of the Company Market Value.

Managing the Value Flows is the Governance ability to make Company Value for the Market, Stockholders, Shareholders Investors and this is the real Company Wealth Compass.

FASB or IAS are not perfect but enough to make possible and far better the Intangible part of the Company economic, if the Board and Executives really wish this, even the disclosing argument is not a handicap.

For the reporting purpose the Intangible Value Flows and Assets will be encode privacy. For analyses and financial experts the Intangible Value capillary Flow identification, is not important to check the technical secret, but to check if the Intangible Flow behind the creative process exist. The analyst observe that the Intangible Flow is already checked like a permanent validated link to the financial Corporate Value and looking to the conversation rate understands the importance for the future Company cash-flows. The number of units in crypto-currencies is sufficient to validate the abundance of the Intangible value creation potential, but the conversion rate proofs the Governance ability to transform this Intangible Flow in Financial Company Value.

Disclosing the Company success algorithm and product Intangible Value composition is not necessary for the financial analyst and neither for the different stakeholders or shareholders to check the Company Market Value.

“Classification in financial statements facilitates analysis by grouping items with essentially similar characteristics and separating items with essentially different characteristics. Analysis aimed at objectives such as predicting amounts, timing, and uncertainty of future cash flows requires financial information segregated into reasonably homogeneous groups. For example, components of financial statements that consist of items that have similar characteristics in one or more respects, such as continuity or recurrence, stability, risk, and reliability, are likely to have more predictive value than if their characteristics are dissimilar." (paragraph 20 FASB )

We can create a Intangible Flows Balance, for the different Intangible Values like: knowledge, competence, partnership, when we measure the IN-Flows and OUT-Flows of the specific Value Centers, the difference is the inside generated Intangible Value, the Value Center Contribution to the Company Value Process for the specific Intangible Flows.

In the Tangible Financial Accounting ( FASB, IAS) we have the accounts classifications also for different products flows and revenues, the difference with the Intangible Flows is the double-entry balance because of the tangible unique financial value.

Let’s take the Knowledge Flow it is composed from the Knowledge Value Centers important to the Tangible and financial Value centers included in the so-called “Value-chains”. The Knowledge Value Center is the first source of any kind of Intangible, tangible and financial value.

The Knowledge Value Centers are classified in the three type of Company Production : Sell , Competitive, non-invoiced production, so will be the same for the Knowledge Value Centers.

The Knowledge Flow Balance is a matrix with the value units coming from the different type of production and different Value Centers not only Knowledge ones. The Analyst will discover how the Knowledge is valued in which production and what value will be most created, coded not disclosed of course, he will appreciate the Governance, when and how much Financial Value will be obtained from the different Knowledge Flows at the end of the conversions visible on the Intangible Flow Balance.

The confluent of Multi Intangible Flows is the “Multi Value Flow Balance” figuring the confluent of the : Knowledge, Competence, Partnership Flows in each of the Company Value Centers. In each Multi Value Flow Cell, corresponding to a Value Center we have the Flow-IN and Flow-OUT measured in the crypto-currency corresponding to the Intangible Value Mix and the equivalent financial value.

The “ Multi Value Flow Balance “ is like the Bill of Materials in the Production Accounting or like the total revenues from different products and different territories.

Accounting for Tangible and Intangible the same Flow Logic

But the Intangible Value Flow can only be generated by the Human acting with his own Intellectual Capital or with the Company tangible and Intangible Assets.

Internally generated competence is generated only by internally generated knowledge. In the new age of economics is key to manage the Intangible source of the financial Company Value the Internal generated Intangible resources (IgIr) this is the most important Company resource, and the Key of the Company resilience, reliability, durability.

The previous age of analysing just the Financial Report “bottom line“, is not anymore sufficient because the high speed of changing in our world: technologies, discoveries, Human behaviour, political behaviour. Without this “miraculous engine“ able to generate the necessary quantity and quality of Intangible Flows the Company dispose of a limited period of time before collapsing in the arms of a better one or just disappearing.

The Fundamental Intangibles Values generating the rest of all others Intangibles Assets are : Knowledge, Competence and Partnerships. All others Intangible Flows & Assets like: innovation, patent, copyright, brand, organisational & procedures,... are combinations of the fundamental Intangibles and Human Intellectual Capital involved in the Valuing assets activity, and all at the end, must convert into tangible or financial Corporate Value.

Partnership is crucial to generate economic value through the products and services conversion into financial Flows and assets, but also to exchange the financial flow and assets in new tangible and intangible value flows and assets necessary to the Company sustainable business cycle and the resilience of his activity.

Tangible production doesn’t exist if first we don’t generate the Intangible Flow.

Looking to the Financial Reporting “ bottom line “ we see just the one sequence of the business cycle related to the Partnerships : customers, suppliers, banks, stock holders, investors ...When we look to the numbers concerning financials, monetary value, we don’t know how long time it will be the products & services production competitive on the market, through ESG we can see if the production will heard, but not if the entire creation and conversion cycle, operating inside the Company Value Network is feed at all the Flows levels like ; enough Knowledge, enough Competence, or enough Partnerships able to generate the wealthy cash-flows.

The total Intangible Value Flows on a definite period of time are the Intangible Asset Market Value (discounted cash-flows ) in this time period. The gain or loss of Intangible Asset Value can be the result of a inadequate Flow non-synchronisation of the offer and demand, or a loss of Intangible Flow because non-distribution towards others Value Centers or even worse, the Intangible Flow is not anymore connected to the financial cash-flow.

The Flow Balance and Multi Value Flow Balance help to discover the flow-disconnections.

We don’t see either if the value conversion is efficient between the intangible values and tangible ones and neither their conversion ratios in financial value, so our analyses will be incomplete and the business resilience not proven. The view of the entire value flow and the conversion between the intangible and the tangible will take up the management challenge to make visible the hidden and most difficult part of the business, the Company INTANGIBLE Value Network (IVN), the key to resilience and financial performance.

The management challenge is to assure the Flow integrity and volume, and check that the Intangible Flow is not wasted, or is not circulating fast enough or wrong arbitration validated in the conversion cycle to the financial value. Exactly like in today financial accounting, we audit the tangible Flows and assets conversion in financial flows and assets. The new stage in Corporate management will be for practitioners, like me, to structure their findings and results of their return-on-action based on experience in Intangible Flows Company management.

This knowledge will be transfer to Business Schools to structure this explicit knowledge and distribute it through to the many Human, economic related activities.

Company Intangible Flows Network are connecting multiple value centers containing Intangible Assets and Humans to generates Intangible Flows from this assets, so this is the equivalent of the accounting system for the financial and tangible assets, he fulfill the same role.

Follow the flow of tangible and financial value through the accounting accounts and their conversion into financial flows and assets, the tangible flows accounting audit is checking the tangible Flows conformity and their conversion, into financial Flows and assets. There is not so much difference with the Intangible Flows and assets where the checking is the same, the Flow and the conversion in financial assets. The different tangible assets are sooner or later converted into financial value, the financial value at the end, is the market value and not the real cost, is like for the Intangible assets.

The tangible asset because the object is materialised and defined in numbers, shape, weight, ...can follow the conversion cycle from tangible to financial once or few times but for the unique asset and his correspondent value, wired together, circulating in symmetry in the tangible and financial parts of the accounting.

The Intangible assets needs to be evaluated for each transaction converting the kind of Value Contribution from one to another even inside the same Value: Knowledge, Competence, Partnership, Tangible, Financial. The conversion is done if an Knowledge contribution will be acquired by the Competence Value Center corresponding to a “Value-Chain” activity.

By difference with tangible assets the intangibles ones can be one intangible asset with an unlimited number of financial or non-financial values and generating an unlimited number of transactions, where the corresponding financial or non-financial value can be very different. The same intangible asset can be traded in an unlimited number of “Value-Chains” with the same asset but in a wide range of financial or non-financial values.

How we organise the accounting around Intangible Flows and Assets?

Even the same Intangible contribution can be estimated in different value units depending on the usage made by the acquirer. The value inflation is generated if you accept to acquire the contribution just to help your friends, not because you need the value contribution helping you generating new Flows of Intangible value. The acquirer charge his Value Center account with a “debt “ with the amount “ payed “ and validated between the contributor and the acquirer. If the value center is not using this Intangible Value contribution to create his own value contribution and distribute it, generating “credit“, than he will be qualified like “ Intangible Dark Hole “.

Where will be valued the intangible contributions ?

The Intangible Value Contribution generated by all Value Centers will be evaluated in the Intangible Value Space on the Intangible Value Network, this is a Virtual Market where we found all the Value Centers with the Intangible Assets and we can “ sell “ our contributions to all others and obtain the right price. The right price can be fixed in an active market also by the “usual payed price” or a catalogue price based on the similar contribution. The same Knowledge Contribution can be just partially needed in a specific “Value-Chain” so remuneration will be less than a complete use of the same contribution. The value contribution can be “compensate by exchange “ also, or the if the value contribution is part of a bigger and complex Asset the price is adapted to the end value of the whole asset like a Project.

The right price can be related to the production cost of the Intangible asset, or the value of the replacement of the contribution or equivalent, but also the scarcity price, innovative solution, unlock the financial performance...each different Value Center is using the Intangible value contribution in a different way the value created will be different like impact on the Company Market Value. The payment unit can be different for each type of fundamental Value like: Knowledge, Competence, Partnership. Inside the same value say knowledge, we can have derivate value like Environment knowledge, or Robotic Process Automation knowledge which is certainly needed to be checked before we make any kind of RSE or other type of certification. We can’t make validation if there is no trace of the knowledge, competence and Partnership Flows converting in the tangible results in RSE.

The value center is the equivalent of the accounting account with “debit” and “credit” but no balance obligations.

We don’t need the balance in order to check the correctness of the posting, this is checked automatically by the “ trader handshake”. On the Intangible value Platform “ blockchain“ can be another solution , like “ crypto-currency “ for the different transactions value units.

VALUE FLOW BALANCE is the consolidated report exit from the transaction based system collecting the value units collected from the Value Centers acting in Knowledge to sustain the three different production types: Production for immediate sell, Production for Competitive Advantage, Production for free, for brand, social, ... All the three Production flows have a tangible and Intangible part of the Flow mixed finally in products and services before converting in financial value through sell.

The Multiple Intangible Flows, the number and variety of the conversions shows the dynamic of the Company Intangible generating power and is the best KPI for the next tangible value production and it’s conversion in financials. When the Intangible Flow starts from Knowledge (even if is not disclosed which ones) and if the contribution is converted into competence, and sooner than later is converted in tangible with clear way to financial, these is the way how much the business is reliable , solid, and profitable because the Intangible Flow is sourced internally, and right collected.

The Business Models like : Social, Governance, Sustainability, Circular Economy or Economy Functionalities are composition of all fundamental Intangible values: knowledge, competence, partnership and tangible assets with the mandatory conversion in financial value without which the “ ASSET “ economic component would be null.

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