Question

When a company goes out of business, it is sometimes able to sell its brand name(s) to another company, based on the value of name recognition. this demonstrates that brands are:

a. liabilities
b. assets
c. hard to profit from relatively unimportant

Answer 1

Brand names are considered assets for companies, as they hold value due to customer loyalty and recognition, and can be sold even when a company goes out of business.

Step-by-step explanation:

When a company goes out of business and is able to sell its brand name to another company due to the value of name recognition, it demonstrates that brands are considered assets. A brand value stems from the customer loyalty, name recognition, and market share that it commands. This is a clear example of how a well-respected brand name, which has been carefully nurtured over many years, can have significant value to a business, even in its cessation. The sales of brands highlight the economic worth attributed to them, capitalizing on the familiar and trusted entity, and thereby presenting opportunities for the purchasing company to extend or revive the brand.