Most accounting professionals would agree that the accounting profession has developed effective tools for measuring and reporting events involving tangible assets. Most might also agree that the profession has miles to travel to report as effectively on events involving intangible assets. Examples of intangible assets are patents developed rather than purchased; customer and supplier relationships; and employee knowledge, skills, and abilities.
Assume that a United States-based manufacturing company implemented a BPR that resulted in the layoff of 20 percent of production workers.
a. How would the layoff impact the company's intangible assets?
b. How would the BPR event be reflected in the company's financial statements?
c. Given your answer to (a), do you think the financial reports reflect all significant effects of the layoff s? Explain.