Introduction
In recent decades, the global economy has undergone a rapid transformation, from an economy driven by “traditional hard assets- plants, warehouses and the like”, to an economy driven by patents, software, intellectual property, and brands. These items fall into a category that has become hugely important in the world of financial reporting, “intangible assets”. Increasingly, the value of a firm is derived not from its tangible assets such as stock, property, plant and equipment but by its knowledge capital, its employees, even by its business processes. As Baruch Lev notes in 2001:

“Pfizer’s value comes from its discovery activities (drug development, patents, trademarks), and from an unusually effective sale force (human capital, training), and not from its lab equipment or pill production facilities, Wal-Mart’s incredible competitiveness derives from unique organizational processes, such as those shifting inventory management to suppliers, rather than from bricks and mortar.”

As the new intangible economy has continued to grow, so has the concern that the current system of financial reporting is incapable of providing the information its users require to assign fair value to a firm. Much research has been conducted analyzing the problems inherent in the current state of financial reporting and many solutions have been proposed. As this paper intends to display, the level of information provided to the users of financial reports regarding intangibles acquired in mergers and acquisitions has improved significantly over the last decade, however little if any progress has been made as far as improving the accounting methodology regarding internally developed intangibles. This paper aims to analyze the weakness in the current system of financial reporting in relation to intangible assets, recount the efforts to improve these weaknesses, and