Accounting for Brands: Contemporary Issues and Alternative Options

13 Pages Posted: 7 Oct 2009

See all articles by Agba D. O. Otonkue

Agba D. O. Otonkue

Cross River University of Technology

Echeng Ezak

affiliation not provided to SSRN

Bernard Enya Edu

Cross River University of Technology

Date Written: October 5, 2009

Abstract

Contemporary issues and alternative options on accounting for brands are the main thrusts of this paper. Thus, issues associated with accounting for brands and their effects on the financial statements or alternative financial treatments and valuations of brands on the balance sheets of corporate organizations are examined and evaluated. Accordingly, the definition and recognition of brands as assets in the balance sheet are considered. The paper also dwells on areas related to brand accounting: the need for accountants in the valuation and management of brands, reliability of cost measurement of brands, accounting treatment for brands, revaluation of intangible assets and disclosure requirements. Other areas that are equally discussed are the issues of brands regulation in Nigeria and the way forward. The paper concludes that the financial world arrives at a brand valuation by estimating the operating profit attributable to the brand and comparing it to an unbranded product. Also, brand valuation appears to be the most promising technique capable of illustrating the importance of brands to managers while bridging the different orientations between accountants and marketing managers. The paper recommends that the choice treatments of goodwill should be replaced by one standard treatment of purchased goodwill, amortization, while internally generated goodwill should not be recorded on the balance sheet; and the interaction between management accountants and selling and distribution managers’ needs should further be strengthened and improved upon to allow for sound managerial decisions.

Keywords: brands, valuatiion of brands, brand accounting, intangible assets

JEL Classification: M40, M46

Suggested Citation

Otonkue, Agba D. O. and Ezak, Echeng and Edu, Bernard Enya, Accounting for Brands: Contemporary Issues and Alternative Options (October 5, 2009). Available at SSRN: https://ssrn.com/abstract=1483100 or http://dx.doi.org/10.2139/ssrn.1483100

Agba D. O. Otonkue

Cross River University of Technology ( email )

P.M.B 1123
Calabar,
Cross River State, WA Cross River 234
Nigeria

Echeng Ezak

affiliation not provided to SSRN

Bernard Enya Edu (Contact Author)

Cross River University of Technology ( email )

P.M.B 1123
Calabar,
Cross River State, WA Cross River 234
Nigeria

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