Answer:
attributed to enhanced NAVs made possible by brands’ disclosure in the Balance
Sheet. However, there is a biggest handicap of reliable and independent assessment
of the brand value. This is the single most important reason for the brands not
allowed to be placed on the Balance Sheet by the Authorities concerned. Though,
value is assigned to externally acquired brands, there is no effective way for
assessment of home-grown brands. Nevertheless, it is gratifying to note that the
Institute of Chartered Accountants of England and Wales (ICAE & W), has given due
recognition to the internally generated brand values and allow disclosure in the
Balance Sheet which necessitates periodic revaluation.
The brands are to be explicitly recognized, as part of purchased Goodwill, by the
ICAI of India, which would make possible the recognition of brand values. Rules and
methodologies necessary for the valuation accounting and disclosure of brands may
be framed in this regard. This would go a long way in governing the brand
accounting practice and contribute to healthy business combinations in India,
especially where the brand values are given serious consideration in the emerging
strategic alliances, mergers and acquisitions fueled by the entry of MNCs. This
assumes special significance in the environment of globalization, liberalization and
privatization of Indian economy.
It emerges from the above discussions that Goodwill, brand valuation and
accounting are definite to take the world of accounting by storm in the near future
which would mark the beginning of a new era of accounting practice. Thus, there
exists a strong and a clear case for brand accounting, especially in view of the
imminent benefits of brand accounting to the corporate bodies and the investors alike.
15.13 Self Assessment Questions
1. Define Brand. Discuss the objectives of corporate branding ?
2. What is the necessity of brand accounting in the competitive business environment?
3. Discuss the difficulties in accounting the brands.
4. Explain various models available for valuation of home-grown brands.
5. How would you value the acquired brands ?
15.15 SUGGESTED READINGS
1. Kotler Philip, Armstrong Gary, Principles of Marketing, Printice-Hall of India (Pvt.)
Ltd.
2. ASB, Goodwill and Intangible Asset, U.K.
3. Pyne Radhanath, Valuing brands, The Accounting Debate, The Chartered Accountant.
4. Datta Manipadma, Brand Equity : A paradigm shift in firm valuation, Chartered
Secretary.