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Q28 (IAS/2023) Economy › Basic Concepts & National Income › Business finance basics Official Key

Consider the investments in the following assets : 1. Brand recognition 2. Inventory 3. Intellectual property 4. Mailing list of clients How many of the above are considered intangible investments?

Result
Your answer: —  ·  Correct: C
Explanation

The correct answer is Option 3 (Only three). In economics and accounting, investments are categorized based on their physical substance.

  • Brand recognition: This is an intangible asset representing the value of a company’s reputation and consumer awareness. It lacks physical form but provides long-term economic benefits.
  • Intellectual property: Patents, copyrights, and trademarks are classic intangible investments. They are legal rights resulting from intellectual creations.
  • Mailing list of clients: This represents proprietary data and customer relationships. As a non-physical resource that generates value, it is classified as an intangible asset.
  • Inventory: Unlike the others, inventory consists of physical goods (raw materials or finished products) held for sale. Therefore, it is a tangible asset.

Since items 1, 3, and 4 are intangible while item 2 is tangible, exactly three of the listed assets qualify as intangible investments, making Option 3 correct.

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Each bar shows the % of students who chose that option. Green bar = correct answer, blue outline = your choice.
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Don’t just practise – reverse-engineer the question. This panel shows where this PYQ came from (books / web), how the examiner broke it into hidden statements, and which nearby micro-concepts you were supposed to learn from it. Treat it like an autopsy of the question: what might have triggered it, which exact lines in the book matter, and what linked ideas you should carry forward to future questions.
Q. Consider the investments in the following assets : 1. Brand recognition 2. Inventory 3. Intellectual property 4. Mailing list of clie…
At a glance
Origin: Books + Current Affairs Fairness: Moderate fairness Books / CA: 5/10 · 5/10

This question bridges basic NCERT Macroeconomics (Inventory) with modern 'Knowledge Economy' concepts. It tests the fundamental definition of 'Capital': Physical (Tangible) vs. Non-Physical (Intangible). The trap lies in over-thinking accounting rules; the examiner simply wants you to apply the 'Touch Test' to distinguish goods from rights/data.

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
In accounting and finance, is brand recognition considered an intangible investment (intangible asset)?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"How Is Brand Equity an Intangible Asset? Brand equity, an intangible asset, is the extra value a company earns from a recognized product over a generic"
Why this source?
  • Directly labels brand-related value as an intangible asset.
  • Frames brand equity/recognition as extra value from a recognized product, i.e., a non-physical asset.
Web source
Presence: 5/5
"Trademarks, goodwill, and brand recognition are examples of assets with indefinite useful lives."
Why this source?
  • Explicitly lists brand recognition alongside trademarks and goodwill as intangible assets.
  • States brand recognition can have an indefinite useful life, a typical intangible-asset treatment.
Web source
Presence: 4/5
"How do accounting standards treat internally developed versus acquired intangible assets? Accounting standards generally only allow acquired intangible assets to appear on balance sheets at their purchase cost. You don’t record internally developed assets because you expense their development costs as incurred, and because establishing fair market value is difficult."
Why this source?
  • Explains accounting treatment nuance: internally developed intangibles (like brand recognition) are generally not recorded on the balance sheet.
  • Supports that while brand recognition is an intangible asset conceptually, acquisition vs. internal development affects recognition.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > 2. Capital Expenditure > p. 108
Strength: 5/5
“Capital expenditure results in the acquisition of a tangible or intangible asset or payment of liabilities. Thus, it impacts the asset-liability status of the Government. Capital expenditures are focussed on GDP growth and thereby incurred on building durable assets like highways, multipurpose dams, irrigation projects, buying machinery and equipment. They are non-recurring type of expenditures also in the form of capital investments.”
Why relevant

Defines capital expenditure as resulting in acquisition of a tangible or intangible asset, showing accounting recognizes intangible assets as a category.

How to extend

A student could ask whether 'brand recognition' can be treated like other intangible acquisitions (e.g., purchased trademarks) and thus capitalized when costs are identifiable.

Macroeconomics (NCERT class XII 2025 ed.) > Chapter 3: Money and Banking > 3.3 MONEY CREATION BY BANKING SYSTEM > p. 39
Strength: 5/5
“Conventionally, the assets of the firm are recorded on the left hand side and liabilities on the right hand side. Accounting rules say that both sides of the balance sheet must be equal or total assets must be equal to the total liabilities. Assets are things a firm owns or what a firm can claim from others. In case of a bank, apart from buildings, furniture, etc., its assets are loans given to public. When the bank gives out loan of Rs 100 to a person, this is the bank's claim on that person for Rs 100. Another asset that a bank has is reserves.”
Why relevant

Explains that assets are items a firm owns or can claim and that assets are recorded on the balance sheet—implying intangibles, if they meet asset criteria, are recorded similarly.

How to extend

One could test whether brand recognition meets the asset criteria (control, future economic benefit, measurability) to justify it being recorded as an intangible asset.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 19: Population and Demographic Dividend > TACKLING SKILL DEFICIT THROUGH HUMAN CAPITAL > p. 574
Strength: 4/5
“Human capital refers to increasing the knowledge, skill levels and capacities of the people of the country. It is termed as an intangible asset that plays a great role in the economic growth and development of a nation. Hence, there is a need to transform the working age population into human capital in order to reap the benefits of demographic dividend in India. General education improves knowledge of the people while skill training enhances their employability and equips them to tackle the requirements of labour market. Persisting skill deficit among the working age is one of the important factors for dropping rates of employability.”
Why relevant

Gives an explicit example (human capital) labelled as an intangible asset, illustrating that non-physical resources can be classified as intangible assets in economic/accounting discussion.

How to extend

By analogy, a student could compare characteristics of human capital and brand recognition (both non-physical benefits) to judge if brand recognition fits the intangible-asset category.

Macroeconomics (NCERT class XII 2025 ed.) > Chapter 6: Open Economy Macroeconomics > 6.1.2 Capital Account > p. 88
Strength: 3/5
“Capital Account records all international transactions of assets. An asset is any one of the forms in which wealth can be held, for example: money, stocks, bonds, Government debt, etc. Purchase of assets is a debit item on the capital account. If an Indian buys a UK Car Company, it enters capital account transactions as a debit item (as foreign exchange is flowing out of India). On the other hand, sale of assets like sale of share of an Indian company to a Chinese customer is a credit item on the capital account. Fig. 6.2 classifies the items which are a part of capital account transactions.”
Why relevant

Lists forms in which wealth can be held (money, stocks, bonds) and treats purchases of assets as capital transactions, indicating a broader notion of 'assets' in finance.

How to extend

A student could check whether brand-related rights or purchased brand valuations are treated as tradeable/recognized assets under capital/financial frameworks.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > Final goods > p. 6
Strength: 3/5
“For example, cosmetics, food, fuel, paper, clothing etc.• (iii) Services: Services are intangibles and are a kind of consumption goods only, as, it is consumed immediately. For example, education, banking, telecom, healthcare etc.”
Why relevant

Notes services are intangibles (consumed immediately), distinguishing between intangible services and durable intangible assets—useful for separating types of intangibles.

How to extend

A student could use this distinction to evaluate whether brand recognition is a durable intangible (like an asset) versus a service-like intangible consumed in revenue generation.

Statement 2
In accounting and finance, is inventory considered an intangible investment (intangible asset)?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Macroeconomics (NCERT class XII 2025 ed.) > Chapter 2: National Income Accounting > 2.2.1 The Product or Value Added Method > p. 19
Presence: 5/5
“Therefore, change in the inventory of a firm is treated as investment. There can be three major categories of investment. First is the rise in the value of inventories of a firm over a year which is treated as investment expenditure undertaken by the firm. The second category of investment is the fixed business investment, which is defined as the addition to the machinery, factory buildings and equipment employed by the firms. The last category of investment is the residential investment, which refers to the addition of housing facilities. Change in inventories may be planned or unplanned. In case of an unexpected fall in sales, the firm will have unsold stock of goods which it had not anticipated.”
Why this source?
  • Explicitly states that change in the inventory of a firm is treated as investment.
  • Distinguishes inventory investment from fixed business and residential investment, implying a separate (tangible) investment category.
Macroeconomics (NCERT class XII 2025 ed.) > Chapter 2: National Income Accounting > 2.2.1 The Product or Value Added Method > p. 18
Presence: 5/5
“What happens to the part which does not get used up? In economics, the stock of unsold finished goods, or semi-finished goods, or raw materials which a firm carries from one year to the next is called inventory. Inventory is a stock variable. It may have a value at the beginning of the year; it may have a higher value at the end of the year. In such a case inventories have increased (or accumulated). If the value of inventories is less at the end of the year compared to the beginning of the year, inventories have decreased (decumulated). We can therefore infer that the change of inventories of a firm during a year ≡ production of the firm during the year – sale of the firm during the year.”
Why this source?
  • Defines inventory as stock of unsold finished goods, semi-finished goods, or raw materials — concrete physical items.
  • Describes inventory as a stock variable with beginning and end-of-year values, indicating tangible nature.
Macroeconomics (NCERT class XII 2025 ed.) > Chapter 4: Determination of Income and Employment > 4.2 DETERMINATION OF INCOME IN TWO-SECTOR MODEL > p. 57
Presence: 4/5
“inventory investment. It can be negative as well as positive: if there is a rise in inventory, it is positive inventory investment, while a depletion of inventory is negative inventory investment. The inventory investment can take place due to two reasons: (i) the firm decides to keep some stocks for various reasons (this is called planned inventory investment) (ii) the sales differ from the planned level of sales, in which case the firm has to add to/run down existing inventories (this is called unplanned inventory investment). Thus even though planned Y is greater than planned C + I, actual , , Y will be equal to actual C + I, with the extra output showing up as unintended accumulation of inventories in the ex post I on the right hand side of the accounting identity.”
Why this source?
  • Explains 'inventory investment' can be positive or negative and distinguishes planned versus unplanned inventory accumulation — a treatment applicable to physical stocks.
  • Uses language of accumulation/depletion of inventories, reinforcing inventories as physical goods rather than intangible assets.
Statement 3
In accounting and finance, is intellectual property considered an intangible investment (intangible asset)?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > 2. Capital Goods: > p. 6
Presence: 5/5
“And while acting as an input it does not get transformed and remains as it is. (Wear and tear of tractor happens over a long period of time but we cannot say that the tractor is getting transformed or consumed) In strict sense the economists consider only the physical capital as the capital but in today's world intangible capital is increasingly becoming important. So, capital can be divided into three categories. • (i) Physical Capital (capital goods)• (ii) Financial Capital (money)• (iii) Intellectual Capital (patents, copyrights etc.)”
Why this source?
  • Explicitly classifies 'Intellectual Capital' as a form of capital and gives patents and copyrights as examples.
  • States intangible capital is an increasingly important category alongside physical and financial capital, linking IP to investment concepts.
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > 13.11 National Intellectual Property Rights Policy 2016 > p. 390
Presence: 4/5
“Intellectual Property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce. Intellectual property rights (IPRs) are the protections granted to the creators of IP and include patents, copyrights, and trademarks etc. which enable people to earn recognition or financial benefit from what they invent or create. By striking the right balance between the interests of innovators and the wider public interest, the IP system aims to foster an environment in which creativity and innovation can flourish.”
Why this source?
  • Defines intellectual property (patents, copyrights, trademarks) as creations of the mind that can generate financial benefit.
  • Describes intellectual property rights as protections that enable creators to earn recognition or financial returns, implying asset/investment characteristics.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > 2. Capital Expenditure > p. 108
Presence: 3/5
“Capital expenditure results in the acquisition of a tangible or intangible asset or payment of liabilities. Thus, it impacts the asset-liability status of the Government. Capital expenditures are focussed on GDP growth and thereby incurred on building durable assets like highways, multipurpose dams, irrigation projects, buying machinery and equipment. They are non-recurring type of expenditures also in the form of capital investments.”
Why this source?
  • States capital expenditure results in acquisition of a tangible or intangible asset, establishing that accounting recognises intangible assets.
  • Implies investments classified as capital expenditure can include non-physical assets such as those represented by IP.
Statement 4
In accounting and finance, is a mailing list of clients considered an intangible investment (intangible asset)?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"“For this reason, internally generated brands, mastheads, publishing titles, customer lists and similar items are not recognised as intangible assets.”"
Why this source?
  • Directly names 'customer lists' as an example of internally generated items that are not recognised as intangible assets under IAS 38.
  • Specifically explains the reason: costs of generating such internally generated items cannot be reliably measured, so they're excluded from recognition.
Web source
Presence: 4/5
"“Accounting standards generally only allow acquired intangible assets to appear on balance sheets at their purchase cost. You don’t record internally developed assets because you expense their development costs as incurred, and because establishing fair market value is difficult.”"
Why this source?
  • States accounting standards generally only allow acquired intangible assets to be capitalised, not internally developed ones.
  • Explains that internally developed assets are expensed as incurred and not recorded because fair market value is difficult to establish—applying to internally created mailing/customer lists.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > 2. Capital Expenditure > p. 108
Strength: 5/5
“Capital expenditure results in the acquisition of a tangible or intangible asset or payment of liabilities. Thus, it impacts the asset-liability status of the Government. Capital expenditures are focussed on GDP growth and thereby incurred on building durable assets like highways, multipurpose dams, irrigation projects, buying machinery and equipment. They are non-recurring type of expenditures also in the form of capital investments.”
Why relevant

Defines capital expenditure as acquisition of a tangible or intangible asset, showing accounting recognizes intangible assets as a class of capital investment.

How to extend

A student could infer that if a mailing list is acquired and expected to provide future benefit, it might be classed as an intangible asset and thus capital expenditure — then check specific accounting rules for examples.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > CHAPTER SUMMARY > p. 125
Strength: 5/5
“Revenue Expenditure - regular expenses - expenditures incurred on civil administration, defence forces, public health and education, maintenance of Government machinery, etc. does not impact the asset-liability status - high-revenue expenditure indicates poverty and backwardness of the economy. • Capital Expenditure: one-time expenses, acquisition of a tangible or intangible asset, or payment of liabilities - impacts asset-liability status - improves the productive capacity of the economy - high capital expenditure indicates lack of private investment in the economy”
Why relevant

Contrasts revenue vs capital expenditure and reiterates capital expenditure includes one-time acquisition of an intangible asset, linking intangibles to balance-sheet treatment.

How to extend

Use this to judge whether a mailing list (one‑time purchase vs ongoing cost) should be capitalised rather than expensed.

Macroeconomics (NCERT class XII 2025 ed.) > Chapter 3: Money and Banking > 3.3 MONEY CREATION BY BANKING SYSTEM > p. 39
Strength: 4/5
“Conventionally, the assets of the firm are recorded on the left hand side and liabilities on the right hand side. Accounting rules say that both sides of the balance sheet must be equal or total assets must be equal to the total liabilities. Assets are things a firm owns or what a firm can claim from others. In case of a bank, apart from buildings, furniture, etc., its assets are loans given to public. When the bank gives out loan of Rs 100 to a person, this is the bank's claim on that person for Rs 100. Another asset that a bank has is reserves.”
Why relevant

Explains what constitutes 'assets' on the balance sheet — things a firm owns or can claim — providing a basic test for asset recognition.

How to extend

Apply the ownership/claim and future economic benefit idea to a mailing list: if the firm controls it and expects benefit, it may meet asset criteria pending accounting standards.

Macroeconomics (NCERT class XII 2025 ed.) > Chapter 6: Open Economy Macroeconomics > 6.1.2 Capital Account > p. 88
Strength: 3/5
“Capital Account records all international transactions of assets. An asset is any one of the forms in which wealth can be held, for example: money, stocks, bonds, Government debt, etc. Purchase of assets is a debit item on the capital account. If an Indian buys a UK Car Company, it enters capital account transactions as a debit item (as foreign exchange is flowing out of India). On the other hand, sale of assets like sale of share of an Indian company to a Chinese customer is a credit item on the capital account. Fig. 6.2 classifies the items which are a part of capital account transactions.”
Why relevant

Gives a broad list of asset forms (money, stocks, bonds, government debt) showing 'asset' is a category covering varied items, implying non‑physical items can be assets.

How to extend

Combine with the capital‑expenditure/asset definitions to hypothesize that non‑physical items like a client list could be treated similarly if they meet recognition criteria.

Macroeconomics (NCERT class XII 2025 ed.) > Chapter 2: National Income Accounting > 2.2.1 The Product or Value Added Method > p. 19
Strength: 2/5
“Therefore, change in the inventory of a firm is treated as investment. There can be three major categories of investment. First is the rise in the value of inventories of a firm over a year which is treated as investment expenditure undertaken by the firm. The second category of investment is the fixed business investment, which is defined as the addition to the machinery, factory buildings and equipment employed by the firms. The last category of investment is the residential investment, which refers to the addition of housing facilities. Change in inventories may be planned or unplanned. In case of an unexpected fall in sales, the firm will have unsold stock of goods which it had not anticipated.”
Why relevant

Describes different types of investment and that changes in inventories and fixed business investment are treated as investments — illustrating accounting distinguishes categories of investment.

How to extend

A student could use this pattern to consider whether spending to acquire a mailing list aligns with 'fixed business investment' (long‑term benefit) rather than a routine expense.

Pattern takeaway: UPSC is modernizing its economic vocabulary. Terms like 'Intellectual Property' and 'Brand Recognition' are now as standard as 'Machinery' or 'Steel'. Prepare for questions on the 'Digital Economy' assets (e.g., NFTs, Crypto, Data Centers) using basic economic first principles.
How you should have studied
  1. [THE VERDICT]: Sitter. NCERT Macroeconomics (Class XII) Chapter 2 explicitly defines 'Inventory' as a stock of unsold physical goods (Tangible). The others are clearly non-physical.
  2. [THE CONCEPTUAL TRIGGER]: National Income Accounting & Capital Formation. Specifically, the classification of 'Investment' (I) into Fixed Business Investment, Residential Investment, and Inventory Investment.
  3. [THE HORIZONTAL EXPANSION]: Memorize the Asset Class buckets. (1) Tangible: Land, Buildings, Machinery, Inventory (Raw material, WIP, Finished goods), Livestock, Cash. (2) Intangible: Patents, Copyrights, Trademarks, Goodwill, Brand Equity, Customer Lists, Software, Carbon Credits, Mining Rights.
  4. [THE STRATEGIC METACOGNITION]: The economy is shifting from manufacturing to services/tech. UPSC is mirroring this by asking about 'New Age' assets (Data/IP) alongside traditional ones (Inventory). Always ask: 'Is the value in the atom (physical) or the bit (information)?'
Concept hooks from this question
📌 Adjacent topic to master
S1
👉 Intangible vs tangible assets
💡 The insight

Classifies assets into tangible and intangible categories, which is essential to decide if brand recognition is an intangible asset.

High-yield for accounting and macro questions: asset classification determines balance-sheet treatment, depreciation/amortization rules, and how investments are recorded in national accounts. Mastering this helps answer questions about treatment of goodwill, patents, brands, and similar non-physical values and links to topics like corporate finance and public expenditure.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > 2. Capital Expenditure > p. 108
  • Macroeconomics (NCERT class XII 2025 ed.) > Chapter 3: Money and Banking > 3.3 MONEY CREATION BY BANKING SYSTEM > p. 39
🔗 Anchor: "In accounting and finance, is brand recognition considered an intangible investm..."
📌 Adjacent topic to master
S1
👉 Capital expenditure and asset acquisition
💡 The insight

Defines capital expenditure as acquisition of tangible or intangible assets, relevant to whether spending on brand recognition could be treated as investment.

Useful for questions on government and corporate budgeting, GDP composition, and investment classification; it enables distinguishing between current expenses and capitalized investments in accounts and national income statistics.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > 2. Capital Expenditure > p. 108
  • Macroeconomics (NCERT class XII 2025 ed.) > Chapter 2: National Income Accounting > 2.2.1 The Product or Value Added Method > p. 19
🔗 Anchor: "In accounting and finance, is brand recognition considered an intangible investm..."
📌 Adjacent topic to master
S1
👉 Human capital as an intangible asset
💡 The insight

Provides an example of a non-physical (intangible) asset category, illustrating that non-material items can be treated as intangible assets.

Helps link micro (firm-level accounting) and macro (national accounting, development) perspectives; mastering this concept aids in framing questions on intangible investment, skill formation, and policy measures that affect non-physical capital.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 19: Population and Demographic Dividend > TACKLING SKILL DEFICIT THROUGH HUMAN CAPITAL > p. 574
🔗 Anchor: "In accounting and finance, is brand recognition considered an intangible investm..."
📌 Adjacent topic to master
S2
👉 Inventory as a tangible stock variable
💡 The insight

Inventory refers to unsold finished goods, semi-finished goods, or raw materials — physical items held over time.

High-yield for national income and firm accounting: knowing that inventory is a tangible stock helps classify production versus sales, compute change in inventories for GDP, and interpret balance-sheet composition. Connects to topics on production, GDP measurement and stock-flow relationships; useful for questions on national accounts and business accounting.

📚 Reading List :
  • Macroeconomics (NCERT class XII 2025 ed.) > Chapter 2: National Income Accounting > 2.2.1 The Product or Value Added Method > p. 18
  • Macroeconomics (NCERT class XII 2025 ed.) > Chapter 4: Determination of Income and Employment > 4.2 DETERMINATION OF INCOME IN TWO-SECTOR MODEL > p. 56
🔗 Anchor: "In accounting and finance, is inventory considered an intangible investment (int..."
📌 Adjacent topic to master
S2
👉 Change in inventories is counted as investment (planned vs unplanned)
💡 The insight

Changes in inventory value are treated as investment expenditure and can be planned or unplanned.

Crucial for exam questions on components of investment and their macroeconomic effects: it explains how unsold output enters national accounts, affects measured investment and aggregate demand, and clarifies unintended inventory accumulation during demand shocks.

📚 Reading List :
  • Macroeconomics (NCERT class XII 2025 ed.) > Chapter 4: Determination of Income and Employment > 4.2 DETERMINATION OF INCOME IN TWO-SECTOR MODEL > p. 57
  • Macroeconomics (NCERT class XII 2025 ed.) > Chapter 2: National Income Accounting > 2.2.1 The Product or Value Added Method > p. 19
🔗 Anchor: "In accounting and finance, is inventory considered an intangible investment (int..."
📌 Adjacent topic to master
S2
👉 Tangible vs intangible asset classification in capital expenditure
💡 The insight

Capital expenditures result in acquisition of either tangible or intangible assets, requiring asset classification on balance sheets.

Essential for understanding accounting treatment and fiscal policy classification: knowing the distinction guides how investments are recorded, affects asset-liability statements, and links to broader topics like public capital formation and balance of payments accounting.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > 2. Capital Expenditure > p. 108
  • Macroeconomics (NCERT class XII 2025 ed.) > Chapter 3: Money and Banking > 3.3 MONEY CREATION BY BANKING SYSTEM > p. 39
🔗 Anchor: "In accounting and finance, is inventory considered an intangible investment (int..."
📌 Adjacent topic to master
S3
👉 Intellectual (Intangible) Capital
💡 The insight

Intellectual property such as patents and copyrights is treated as intellectual capital, a distinct form of capital alongside physical and financial capital.

High-yield for UPSC: connects innovation/IP policy to macro concepts of capital formation and the knowledge economy. Helps answer questions on classification of capital, investment priorities, and policy measures to promote intangible assets.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 1: Fundamentals of Macro Economy > 2. Capital Goods: > p. 6
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > 13.11 National Intellectual Property Rights Policy 2016 > p. 390
🔗 Anchor: "In accounting and finance, is intellectual property considered an intangible inv..."
🌑 The Hidden Trap

Goodwill. It is the most common intangible asset on corporate balance sheets (the premium paid over fair value during an acquisition). Expect a question linking 'Goodwill' to 'Banking Mergers' or 'Insolvency' contexts.

⚡ Elimination Cheat Code

Use the 'Touch Test'. Can you physically touch the asset in a warehouse?
- Inventory (Goods) -> Yes -> Tangible.
- Brand (Reputation) -> No -> Intangible.
- IP (Legal Right) -> No -> Intangible.
- Mailing List (Data) -> No -> Intangible.
Result: 3 Intangibles. Mark 'Only three'.

🔗 Mains Connection

Mains GS-3 (Investment Models): This links to the debate on 'Gross Fixed Capital Formation' (GFCF). Does India's GFCF data adequately capture the 'Intangible Investment' driving our Service Sector? This is a key argument for why GDP data might be under-reporting growth in the digital era.

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