The article, Does Accounting Account for Knowledge, poses thought-provoking questions about the future of accounting and current accounting inefficiency. The major issue at hand seems to be our knowledge (i.e. non-physical) based economy coupled with the current accounting system for measuring physical capital. I have never considered this issue in the past, but while reading this article, the problem seemed obvious.
The article concludes with a discussion of six alternatives to better account for non-physical future economic benefits. I hope to look further into these alternatives later, but my impression of the first two were an entire reworking of our current conceptual framework with an estimate-based earnings realization model. This includes redefinition of assets, liabilities, and equities, which are the part of the core for all current accounting. The real issue that I had with both of these solutions (TVC and AFTF) are that they simply have management estimate profits and expenses for projects in advance. This could be problematic when management has been proven to serve their own agenda and earn benefits based on their high estimates.
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