Open AccessThe Value of Intangibles for Decision Analysis under the Influence of a Pandemic
Author(s) -
Jeffrey E. Jarrett
Publication year - 2021
Language(s) - English
DOI - 10.47363/jesmr/2021(2)116
Subject(s) - abandonment (legal) , capital budgeting , cash flow , actuarial science , value (mathematics) , accounting , financial statement , economics , business , capital (architecture) , finance , debt , computer science , political science , audit , machine learning , law , archaeology , history
The abandonment option under various capital budgeting models are discussed in this manuscript to bring forth the notion that present value of cash flows is often improperly estimated in the financial models utilized in the decision analytic process. In this study, intellectual property rights and other intangible assets often are often not considered in accounting estimation processes utilized in financial accounting. A decision maker often utilizes misestimates of the present value of cash flow resulting in less-than-optimum capital budgeting decisions. Decisions to abandon for salvage and other similar decisions improve when the present value of intangibles and property rights are included in the decision process. This last statement is the goal of this study as well as to present well-founded processes to improve abandonment and similar decisions in capital budgeting decisions. The estimation problem in financial accounting is included in the analysis to accomplish this goal. In addition the role of a Pandemic is emphasized