What Anthropic's IPO Can Teach Chartered Accountants About the Intangible Balance Sheet
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Anthropic has pushed its IPO launch to mid-October at the earliest. The company filed a draft S-1 confidentially in early June, was last valued at $965 billion post-money off a $65 billion round in May, and there's open talk of it pricing above a trillion dollars, with targets of 2 trillion being thrown around. Reported run-rate revenue passed $47 billion by late May, with roughly 80% of that coming from business customers rather than consumer subscriptions.
Whatever it eventually prices at, it's a good moment to ask what investors think they're buying, because the answer has been drifting away from anything a balance sheet holds for about fifty years now.
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🧠 Fun fact: When Google went public in 2004, it later offered exactly 14,159,265 additional shares, being the first eight digits of pi after the decimal point. The law firm that ran that IPO, Wilson Sonsini, is reportedly running this one too. Make of the continuity what you will.
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The Main Story
Why the money went intangible
There's a straightforward reason the largest companies in the world stopped owning very much.
A factory makes one thing at a time, and if you build a second one you've essentially doubled your costs to double your output (ignoring any economies of scale). On the other hand, an algorithm doesn't work like that.
Write the ranking model once and it serves one user or a billion at a marginal cost that rounds to nothing. Economists call these assets non-rival, which just means your using one doesn't stop anyone else using it, and it's the reason businesses built on code and data pulled away from everything else over the last two decades.
Meta is the best example. Its most valuable assets are its social graph and the ranking model sitting on top of it, both of which get better the more people use them. TikTok is the same story with the volume turned up.
When the US government spent years arguing over whether ByteDance could keep operating there, the asset everyone was actually fighting about was a recommendation system and underlying data.
The numbers behind the shift are less anecdotal than they sound. WIPO reckons global investment in intangible assets passed $10 trillion for the first time in 2025, growing 5.5% a year since 2020 against 3.2% for tangible investment, and now running near 13% of GDP across the 29 economies it tracks. Ocean Tomo's 2025 study puts intangibles at around 92% of S&P 500 market value.
A valuation like Anthropic's is the current pattern that's been building since before most of us were born.
What the accounting does about it
IFRS treats an intangible asset completely differently depending on how you came by it.
Build it and you mostly can't recognise it → IAS 38 splits an internal project into a research phase and a development phase. Research spend goes to profit or loss as incurred. Development spend capitalises, but only where you can demonstrate all six criteria in IAS 38.57, running from technical feasibility through to reliable measurement of the expenditure. If you can't tell where research ended and development started, IAS 38.53 tells you to treat the entire project as research, which is a quietly brutal default. Some items are blocked outright regardless: IAS 38.63 bars internally generated brands and customer lists, and IAS 38.48 bars internally generated goodwill.
Buy it and you have to recognise it → IFRS 3.B31 requires an acquirer to recognise identifiable intangibles separately from goodwill at fair value, and IAS 38.34 drags in-process R&D onto the balance sheet on acquisition even where the acquiree was never permitted to capitalise a cent of it.
That asymmetry explains most of Meta's balance sheet. It carries roughly $28 billion of goodwill and intangibles, and the bulk of that traces back to buying Instagram and WhatsApp, while the ranking model it built in-house carries close to nothing.
There's no revaluation route out either → IAS 38.75 restricts the revaluation model to fair value measured against an active market, and IAS 38.78 says no active market can exist for brands or patents, since each one is unique and the deals are negotiated privately. Even where you do capitalise, IAS 38.92 notes that technology assets are prone to obsolescence and tend to carry short useful lives, with amortisation starting under IAS 38.97 as soon as the asset is available for use.
The paragraph worth committing to memory is IAS 38.50, which says the difference between an entity's fair value and the carrying amount of its identifiable net assets may capture all sorts of factors, but those differences don't represent the cost of intangible assets the entity controls. So entity value FV - net assets DOES NOT = intangible assets.
Where AI labs don’t fit in
Meta and TikTok reached enormous scale on comparatively light balance sheets. Serving another user cost almost nothing, which is exactly why the intangible story works so well.
Frontier AI doesn't behave that way. Every answer an AI model gives burns compute, so cost of sale scales with usage in a way the social platforms never had to think about.
Anthropic's gross margins have reportedly run around 40% against a plan of 50%, because inference (the execution phase where a trained machine learning model processes new, real-world data to make a prediction, generate an answer, or take an action) turned out more expensive than budgeted.
The capital commitments are the other half of it. Anthropic announced a $50 billion American infrastructure programme in November 2025 and has since expanded its partnership with Google and Broadcom to multiple gigawatts of TPU (Tensor Processing Unit - fancy word for a chip that makes AI faster) capacity coming online from 2027, which its CFO described as the company's most significant compute commitment to date.
What's emerging, then, is a business valued almost entirely on intangible assets. This lands on audit files in specific places: right-of-use assets and lease terms under IFRS 16 on data centre capacity, useful life estimates on hardware in a market where the next generation of chips arrives before the last one finishes depreciating, decommissioning and power arrangements, and impairment testing under IAS 36.
That impairments is an interesting one. You're identifying a cash-generating unit under IAS 36.66 and 36.67 that mixes physical infrastructure with models whose recoverable amount depends on assumptions nobody can benchmark, in a sector where "significant changes in the technological environment" is a permanent state.
Expect the governance side of things to rapidly play catch up too. King V took effect for financial years beginning on or after 1 January 2026, and Principle 10 covers data, information and technology, asking for human oversight and override mechanisms proportionate to the risk wherever AI gets deployed.
South Africa's draft National AI Policy is still in consultation with regulation expected in 2027 or later. Elsewhere the EU AI Act is phasing in and ISO 42001 is building a market for AI assurance work, which is a reasonable bet for where a chunk of audit and advisory revenue ends up over the next decade.
Insights From The Pocket CA
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Here’s the technical detail in this scenario from the number-crunching machine:
IAS 38 Intangible Assets
Development expenditure shall be recognised as an intangible asset if, and only if, all six criteria are demonstrated, covering technical feasibility, intention to complete, ability to use or sell, probable future economic benefits, adequate resources, and reliable measurement (IAS 38.57).
Where an entity cannot distinguish the research phase from the development phase, it treats the whole project as research (IAS 38.53).
Cost runs from the date the recognition criteria are first met, and expenditure previously expensed cannot be reinstated (IAS 38.65, IAS 38.71).
Internally generated brands, mastheads, publishing titles and customer lists shall not be recognised, because their cost cannot be distinguished from developing the business as a whole (IAS 38.63, IAS 38.64).
Internally generated goodwill shall not be recognised, being neither separable nor arising from contractual or legal rights (IAS 38.48, IAS 38.49).
Differences between an entity's fair value and the carrying amount of its identifiable net assets do not represent the cost of intangible assets controlled by the entity (IAS 38.50).
Computer software and similar intangibles are susceptible to technological obsolescence, so useful lives will often be short (IAS 38.92), and amortisation begins once the asset is available for use (IAS 38.97).
The revaluation model requires fair value by reference to an active market, and no active market can exist for unique assets such as brands or patents (IAS 38.75, IAS 38.78).
IFRS 3 Business Combinations
The acquirer recognises identifiable intangibles separately from goodwill where they meet the separability or the contractual-legal criterion (IFRS 3.B31, IFRS 3.B32).
An acquiree's in-process research and development is recognised on acquisition if it meets the definition of an intangible asset, irrespective of whether the acquiree recognised it (IAS 38.34).
Anything not identifiable at acquisition date is subsumed into goodwill and cannot later be reclassified out (IFRS 3.B38).
IAS 36 Impairment of Assets
Where the recoverable amount of an individual asset can't be estimated, it's determined for the cash-generating unit to which the asset belongs (IAS 36.66, IAS 36.67).
A CGU's recoverable amount is the higher of fair value less costs of disposal and value in use (IAS 36.74).
All assets used to generate the relevant cash inflows must be included in the unit, or it can appear fully recoverable when an impairment has actually occurred (IAS 36.77).
Significant changes in the technological, market, economic or legal environment are external indicators that an asset may be impaired.
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The Bottom Line
Anthropic eyeing targets over a trillion dollars for their IPO is a telling story of where business has been heading, and will continue to head in the coming years.
If you want something out of this for the week, find the intangible assets note on whatever client is on your desk and check what got capitalised against what got expensed. Then see whether anyone has revisited the useful lives since the technology underneath them changed.
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