The question is related to the accounting in Business. The addressed three financial statements are : SOFP , CFS and PL. Brand equity is considered on of the major intangible assets of a company, specially the well-known brands, the value of the brand is measured based on the marketing researches. Can please anyone explain if the calculated value should be positioned in any of above financial statements ?
http://www.jstor.org/stable/2491412?seq=1#page_scan_tab_contents
Dear Amer, you must insert values about brands in the followings manners:
1) in SOFP, if this stands for Statement of Financial Position: it must be inserted in the Assets, as Intangible Assets, the calculated value of brand;
2) in CFS, if this stands for Common Financial Statements: they must be inserted the receipts and expenses generated by the brand, but not the calculated value;
3) in PL, if this stands for Profit & Loss: they must be inserted the amortization and, if it is the case, the depreciation of brand
The guide by Quirino above is ok but you also need to look at several standards for example IAS 36 (impairement) and IAS 38 intangible assets if you are outside the US.
Erick is very right.
You should be aware of which GAAP that is being used by the company. US GAAP, UK GAAP and IFRS for instance treat intangibles very differently. As far as I recall, UK GAAP (I can see you hare in Machester) have like IFRS quite strict rules for when it is allowed to capitalise internally generated intangibles. If it is a purchased brand value, then it is a completely different ball-game.
According to IFRS, there is obligation to valuate brand only in case of purchase or merge and acquisition. But there are different possibilities of valuation methods valuation. You can prepare accounting historical costs of purchase in -> balance sheet -> assets -> intangibe assets. In the other side you got amortization of the brand in Profit and Loss account. Other way we can use fair value (look at IFRS no.13) and business valuation methods as intellectual capital valuation for example VAIC. And there can occur depreciation, apprciation and amortization of the asset value. If you would like to get more information please send me private message with details of your research.
Kind regards
Igor Perechuda
Article Value of a football club in the context of social media
Dear Amer Mustafa,
If you are interested to take sample from Indonesia, I suggest you also read our rules state on PSAK 19. Thank you.
regards,
Anastasia
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