In a New Brand World -Why is an asset not an asset?

Abstract

Background and problem: The treatment of internally generated brands has for long been under discussion. The different opinions represented by accountants and marketers show the gap between those who believe that internally generated brands should be recognized on the balance sheet and those who believe they should not. Purpose: The purpose of the study is to gain further insight within the field of brand assets and draw conclusions that might provide guidance in further development of the legal and norm setting environment. Further, the purpose is to point out aspects on international brand recognition to be able to recognize internally generated brands. The thesis will provide answers to the question why an asset, often a company’s most important asset, is not an asset. Delimitations: This thesis takes on the international discussion on brands as assets and brand recognition. Therefore, the research is not limited geographically and there is no intention to scrutinize any legislation on any local or national level. This limits the discussion to concern and approach to the international norm-setting and legal environment. The research focuses on the perceptions on internally generated brands as assets and on global brand valuation method. Methodology: This research is conducted in a qualitative way, using both an exploratory and a descriptive approach. The gathered material consists mainly of interviews, with further input from articles, journals and publications. Interview persons were chosen mainly for their participation in relevant business articles on the subject. Results and conclusions: The research shows that the general opinion is that internally generated brands should be recognized, as well as acquired brands, but that there are difficulties related to this process. There must be possibility to measure such assets with reasonable certainty. Many argue that there should be a shift towards a harmonization regarding international brand valuation. This is argued to ease the comparability of internally generated brands. Suggestions for further research: It would be interesting to bring forward further research on what it would mean to companies to include internally generated brands on their balance sheet. This could be done by looking deeper into the comment letters on IAS 38, as these letters vary in critique and come from different countries.