Discuss the Difficulties Relating to the Recognition and Measurement of Intangibles Generally and of Brands in Particular.

The corporate identity is not merely the “the most important reason or purpose for someone or somethings existence.” (Webster, 1828) Paul Verbinnen coined the phrase as “intrinsic identity.” (Doorley & Garcia, 2015) The intrinsic identity of a company is what the company stands for and what they wish to portray to the public about themselves. If the company has a good idea of what the corporation’s intrinsic identity is, they can build on their performance, behaviour and communication and therefore increase their reputation.

These assets are used for producing the services or goods, administrative aims or for the rental objectives and offer benefit for the time period of more than one financial period. For the non-current assets there can be two modes i.e. cost or revaluation. In cost model the asset is mentioned at cost by deducting the amount of accumulated depreciation while in revelation model the asset is mentioned on fair price. Philips uses the cost model where the depreciation is calculated by straight line method (Philips.com,

In intellectual property assets and software showed its opening balance, closing balance, additions, disposals, accumulated amortization and impairment currency translation differences and net amount. Goodwill just showed the opening and closing balance and currency translation difference not any impairment loss. However, in intangible capital work in progress, it also showed other more informationabout amount transferred to software intangibles and transferred from PPE. At the end of the notes 12 of intangible assets, it provided additional information about the amortization charge that was recognized in general and administration expenses in the statement of comprehensive income （CSL annual report 2011）and impairment tests for cash generating units containing goodwill. CSL Behring and CSL Blotheraples all were CSL’s goodwill. The total intangible assets in 2011 were lower than before because of amortization in every year.

Furthermore, the Key Audit Matter (KAM) of goodwill and intangible assets disclosed in Telstra Corporation Ltd annual report are recognised as core assets. In note 2.4.2, it can be seen that intangible assets has the highest deferred tax liabilities after non-current assets. This is to be expected since it is a telecommunication and technology company so the cost incurred is significant for intangible assets such as research and development, capital costs and obtained intangible assets. Therefore, this is considered highly material as the events or transactions would impact Telstra as a whole such as the industry competitiveness and not just the financial statement alone. Moreover, it is complex to evaluate the impairment of the goodwill and

Uniqlo’s advantage is its resources of its brand name, making it an intangible value for the business Groucutt, Lydley and Forsyth 2004, p. 285).

Determine amortisation expense: (a) A trademark at a cost of $1million. Trademark allows production of 10,000 units. During the year ended 30 June 2012, Shoreham Ltd produced 1,000 units. (b) The right to use the trade name 'Coca Cooler' in the local district for a cost of $700,000. It is more than 50 years old and is expected to be popular indefinitely. During the year ended 30 June 2012, it produced one-tenth of total estimated units, and the A/Professor Indra Abeysekera market price of the trade name was $650,000.

Accounting Standards Codification (ASC) replaced all U.S. financial accounting standards in July 2009. Consequently, ASC 350, Intangibles – Goodwill and Other, replaced SFAS 142, Goodwill and Other Intangible Assets in September 2011. Under ASC 350, goodwill must be periodically tested for impairment. Goodwill impairment is determined through a two-step process outlined in ASC 350. However, in January 2014, an update to ASC 350 was released, which authorized an alternative method of accounting for goodwill servicing private companies that could consequently reduce their costs and simplify their accounting methods. Additionally, the international standard for goodwill impairment, IFRS 3, specifically mandates that companies must annually test goodwill for impairment. The specifics of the impairment test are entailed in IAS 36 Impairment of Assets, the international standard for accounting for goodwill associated with business combinations. This paper will analyze the effects of the accounting policies enacted under these standards and in particular analyze the efficiency of impairment testing methods versus amortization of goodwill and the connection of impairment methods with managerial and CEO compensation and earnings management. Finally, this paper will analyze if impairment testing under ASC 350 and IAS 36 or amortization, which is

The second qualitative factor relating to Sprint has to do with the overall financial performance. FASB codification establishes if the overall financial performance decreases, meaning decreasing cash flows or negative revenue compared to previously project revenues, then impairment may exists . The most recent example of this is last quarter when our company experienced a 215 million dollar decrease in income from continuing operations compared to the previous year’s third quarter. The final qualitative factor relating to Sprint deals with the company’s stock price. FASB claims a decrease in share price that is sustained is a qualitative factor . In 2005, our company’s stock price was $23.36 per share and has been decreasing ever since. Now, it remains at $19 per share. Since there are three qualitative factors relating to Sprint, it seems relatively likely that the carrying value of goodwill exceeds the fair value. According to FASB, the entity now must perform the first step of the two step impairment process . The first step of the impairment test compares the fair value of the company to the carrying value . The fair value of a company is the amount they would receive on the current date if they were to sell all of their assets. According to FASB, market prices in actual markets exists as the best method for computing fair value . This can be done by taking the market price per share times

The considerable debate on the advantages and disadvantages of moving towards a full mark to market accounting system for financial institutions has been triggered by the move of the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) to make changes in this direction as part of an attempt to globalize accounting standards. Both fair value accounting and historical cost accounting have their advantages and drawbacks and therefore it is hard to conclude which system is superior to the other. Within the accounting systems, the valuation of intangible assets has been a constant source of attention by the board as well. This essay summarizes the superiority of fair value accounting in measuring value of certain assets and liabilities including intangible assets in light of the IASB discussion paper released recently.

As discussed before, a brand is a unique business identity, and a well managed one would be the asset of an organization, and the marketing and financial value associated with its strength in a market is so-called brand equity. (Dibb et al, 2001, p 272) According to Dibb et al (2001), there are four main elements underlie the brand equity, which are brand name awareness, brand loyalty, perceived brand quality and brand associations.

With regard to intangibles, Coke’s intangibles amount to only 11.5%* of total assets, or only half that of Pepsi’s intangibles. This demonstrates the relative magnitude of Pepsi’s intangible asset balance. Coke’s major liabilities include loans/notes payable (33.9% of total liabilities) and accounts payable/accrued expenses (17.6%

Branding is the name, term, symbol, design, or a combination of all this items that would identify a company’s products or services and it differentiates the company from other competitors. A company or individual will have to register their brand with the U.S. patent office to be able to make it their own and become a trademark, if not anyone else can get that brand. A brand is very important in today’s industry it defines the whole company, it creates the possibility of signifying a promise or value among their customers. According to the book, brand equity has been the intangible value of a brand. A brand signifies a lot to

Brand equity is a valuable asset of company with a positive financial value. In fact, brand equity is the value captured by the brand. A brand equity is an intangible or tangible asset that set a company apart from its competitors. It’s the consumer’s perception about a product or service. Brand equity is the consumer’s feeling and beliefs about a product and service. Employees must understand the importance of their action for the brand. It represents the financial asset of the company that add value to the product or service.

Brand value can also be assessed based on the monetary premium or financial value attributed to the brand, apart from other tangible assets, that is the

An intangible asset is a non-monetary asset that that has no physical affluence and which are identifiable by fulfilling the requirement of certain recognition criteria. The intangible asset must be either separable, meaning it can be sold, transferred, exchanged, licensed or rented to other third parties on its own as opposed to being a part of the business. Assets can also however be identifiable if they arise from either contractual or legal entitlements. Upon meeting the relevant criterion for recognition of an intangible asset, they are primarily measured at cost or by use of the revaluation model. Unless the asset has an indefinite useful life, it will be amortised on a systematic basis over the use of its practical life. (Deloitte, 2015) (PWC,2014) (C.Finch, 2008)