What it is:
How it works/Example:
Some of the most famous patent for the Chia Pet, the trademark for the Nike "swoosh" or the code for the next " of " video game. These assets all produce significant , and they are all the product of research, trial and error, hard work, and talent, but you can't touch them.
Knowledge capital largely relies on the talents of people rather than the work of machines, which means companies that want to grow and maintain knowledge capital must grow and maintain talent in their employees.
Why it matters:
Knowledge capital can give companies significant competitive advantages. It is hard for competitors to replicate, and it has a long life. For some companies, knowledge capital can be the bulk of the company's
Like most assets, knowledge capital can lose value as it ages; that is, it amortizes (depreciation is the used when referring to tangible assets). The rate at which a company chooses to amortize intangible assets may result in a book value that differs from the current of the assets. Although the Financial Standards Board, the Securities and Exchange , and other regulatory bodies define how and when a company’s assets are reported, companies may employ a variety of accepted methods for recording, depreciating and disposing of assets, which is why must also carefully study the to a company’s .