Accounting for Goodwill: a Controversial Topic in Accounting?

The most important and significant ownership advantage of IKEA is their brand value. With a brand value of 15,885 million USD, IKEA is ranked 26th on the top 100 of Interbrand’s Best Global Brands. IKEA had an increase in sales and operating income in 2013 of respectively 3 and 15 percent (1). Interbrand uses three key components to evaluate the brands. The first key component is a Financial Analysis which measures the economic profit of the brand. Economic profit is the difference between the earned revenue and the opportunity cost of the input (2). The second key component is the Role of Brand or in other words the influence on customer choice. Role of Brand measures the proportion of the decision to purchase that is attributable to the brand relative to other factors. Applying Role of Brand to forecast profits gives the earnings attributed to the brand alone. Interbrand’s last key component is Brand Strength, which is a diagnostic tool for measuring brand performance relative to competition. It supports brand management with identifying areas of highest business impact (3). Applying these three analysis on the brand IKEA backs up the claim that IKEA belongs in the top 26 of firms with the highest Brand

auditors for RC determined that the goodwill had not been impaired during the year. In year 2, however, the

Goodwill is an intangible asset for which the accounting methods are pronounced by FASB issued _SFAS No. 142_, "Goodwill and Other Intangible Assets." Goodwill is an earning power concept in which its value is an approximation equal to the discounted present value of future earnings that would exceed normal industry earnings. Goodwill is recognized as an intangible asset when it is acquired through a purchase of an existing company. Its value is determined by the excess of the total fair value above the fair value of distinguishable net assets. Amortization of goodwill is

Generally brand equity refers to the fact that various outcomes result from service or product marketing owes to its brand elements as compared to outcomes of other brand.”

A firm’s performance and financial standing can be measured by a number of valuations and techniques. Financial data is used to perform a financial analysis on a business to determine the company’s stability, profitability, and liquidity. For instance, J.C. Penney’s financial stability was drastically damaged leaving all external and internal stakeholders questioning the value of the department store. J.C. Penney’s has a number of stakeholders that should always be satisfied while making business decisions. One of J.C. Penney’s most valuable stakeholders is its customers. J.C. Penney’s customers expect the retailer to provide them with up-to-date products at an affordable cost, while also expecting trained personnel to attend to their needs. One of J.C. Penney’s main goal is to get new and repeated customers; therefore, it is critical for J.C. Penney’s to develop a strong understanding of its customer base. During J.C. Penney’s failure, many customers reported that employees did not make an effort to develop a professional relationship with them.

Finally, Shamma (2011) claims that total brand equity consists of product and corporate brand equity which depends on company’s market, social and financial performance. Furthermore, there is a positive relationship between company’s corporate brand and socially responsible marketing and total brand equity (Shamma, 2011). Similarly, Grace and King (2011) talks about employee brand equity, which is the result of positive and productive employee brand-related behaviour and is strongly linked with brand’s strength (Grace and King, 2011). In contrast, Kay (2004) argues that corporate branding differs from product and service branding as it is aimed at different target audiences. For instance, corporate branding usually targets company’s shareholders and employees whereas product and service branding is focused on consumers who are not really interested in corporate brand identity (Kay, 2004). However, it is also claimed that some companies, especially those that started as niche businesses that appealed to small segments of socially conscious customers succeeded in creating strong and distinctive corporate brands. Referring to CC and Jim Beam corporation consumers are not that concerned about company’s overall image, however introduction of corporate social responsibility and socially

The interest for moral, responsible conduct in public businesses is a need for both the prosperity of worldwide markets, and the people whom organizations utilize. Accountability practices is significantly more imperative for nonprofits because of the fact that not-for-profits are needy upon open support for their employment. However, nonprofits are imperative to the groups that they serve. Keeping up moral business hones guarantees that not-for-profits not just shield their open notorieties, in this way safeguarding and developing the bolster expected to meet their social administration objectives, additionally with a specific end goal to keep helping the groups that are regularly needy upon them. Not-for-profits are right now confronting

As Fombrun and van Riel (2004) have proved, favourable reputations of brands bring higher financial returns. Accordingly, perceptions of trust, memories,

This paper will examine budgeting procedures for profit and non-profit businesses and compare similarities, and if they exist, differences in accounting practices. This paper will also attempt to review what is Generally Accepted Accounting Procedures (GAAP) for budgeting for any organization to be successful.

Goodwill is a premium that the acquiring company pays above the fair value of all net assets of the acquired company, which represents an extra value attributed to brand and reputation of the acquired company. Accounting treatment for goodwill has evolved significantly as goodwill becomes an increasingly important economic resource for many companies.

One thing that can make or break a company is its brand equity. Brand equity is the value that comes with the familiarity with a company’s branding and the feelings consumers have towards that brand (Brand Equity, n.d.). A company with strong brand equity usually gives consumers a sense of reliability and value; causing a higher inclination to purchase its products. It usually takes

The dynamics of the brand reputation helped build better businesses, and the role of the brand which consider as a barometer of value has sustained growth.

ACC307 INDIVIDUAL ASSIGNMENT TASK 1: Contemporary Issues of Accounting Theory Fair Value Measurement Overview After the International Accounting Standards Board (IASB) released the IFRS 13 Fair Value Measurement in May 2011 for the purpose of completing its joint project with the US Financial Accounting Standards Board (FASB) on fair value, the Australian Accounting Standard Board (AASB) released the Australian equivalent - AASB 13 Fair Value Measurement in the September of the same year. This standard permitted early adoption but generally started to take effect for the financial reporting periods beginning from 1 January 2013. This new standard requires no new requirement for the adoption and but it was accompanied with the issuing of AASB 2011-8 Amendments to Australian Accounting Standards arising from the AASB 13 which has made consequential changes to 32 standards and 9 interpretations for the adoption in Australia. The new standard attempts to unify IFRS and US GAAP by specifying how entities should apply the fair value measurements that applied in previous IFRS standards. It clarifies and redefines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”, sometimes referred to as an “exit price”. It also sets out a single source guidance for a robust measurement framework to ensure that the requirements are applied consistently and have clear

One of these is with regards to goodwill and intangible assets with identifiable useful lives.

“From humble beginnings, Sunseeker have evolved from being a brand, to a global icon. Producing the finest motoryachts the world has ever seen” (Sunseeker, 2015). From this statement found plastered on Sunseeker’s home page it is clear to see the position the brand wishes to occupy in the mind of consumers. While they provide a function in the form of transport and accommodation, their brand is evidently a symbol of luxury and the epitome of the lavish lifestyle. At the centre of this position is the British heritage of yacht building, universally acknowledged as among the finest in the world. Sunseeker has enjoyed a positive Country of Origin (COO) effect for decades. However since 2013 when 91.8% of the company was acquired by Dalian Wanda Group, a Chinese conglomerate, the brand identity and equity is at risk from poor COO associations related to the Chinese ownership. This essay will explore, through the use of academic models and literature as well as carefully selected aspects from Sunseeker’s situation, the possible effects on brand equity as a result of the acquisition. The main areas of discussion are; whether COO effect plays a significant role in brand equity, the methods used by Sunseeker to control the COO effect and their degrees of success and finally whether the same issues apply in Asia and