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Brands The Treatment Of Brands Is Similar Under Both Us Gaap And Ifrs Norms...

Brands: The treatment of Brands is similar under both US GAAP and IFRS norms.

It has been specifically clarified that the value of brands generated internally should not be reflected in financial statements. In case of brands obtained through purchase or acquisition the value of the brand will have to be computed at cost or fair value and it will need to be determined whether the life of the brand is indefinite or finite.

Brands with indefinite lives will need to be subjected to rigorous impairment tests every year, and treated like goodwill. Brands with finite lives, while subject to yearly impairment tests, will need to be amortised like other intangible assets. It needs to be noted that the mode of assessment of impairment in US GAAP is different from IFRS and this factor will accordingly come into play for assessment of impairment.

b) Trademarks and Patents
The costs of Patents and Trademarks, when developed and obtained internally comprise, mostly of legal and administrative costs incurred with their filing and registration and are expensed out as regular legal or administrative costs. The IFRS specifies that no revaluation is possible for Trademarks and Patents in accordance with IAS 38. This is because an active market cannot exist for brands, newspaper mastheads, music and film publishing rights, patents, or trademarks, as each such asset is unique.

In the case of patents and trademarks obtained through acquisition, the treatment is similar to the broad category of intangible assets, for identification, valuation, measurement and recognition for purposes of separate disclosure. Acquired patents and trademarks are measured initially at purchase cost and are amortized on a straight-line basis over their estimated useful lives.



Bibliography

Bullen, H, and Cafini, R, 2006, Accounting Standards Regarding Intellectual Assets, UN Department of Economic and Social Affairs, Retrieved November 14, 2006 from unstats.un.org/unsd/nationalaccount/ia10.pdf

FASB: Financial Accounting Standard Board, 2006, Retrieved November 14, 2006 from www.fasb.org

IFRS and US GAAP, 2005, IAS Plus , Retrieved November 14, 2005 from .net/dtt/cda/doc/content/dtt_audit_iasplusgl_073106.pdf

Intangible assets: brand valuation, 2004, IFRS News Brand Valuation, Retrieved November 14, 2006 from www.pwc.com/gx/eng/about/svcs/corporatereporting/IFRSNewsCatalogue.pdf

Radebaugh, L.H., Gray, S.J., Black, E.L., 2006, International Accounting and Multinational Enterprises, 6th edition, John Wiley and Sons, inc., USA

Roberts, C, Westman, P, and Gordon, P, 2005, International Financial Reporting: A Comparative Approach, 3rd edition, FT Prentice Hall, USA

Similarities and Differences, 2005, A comparison of IFRS, US GAAP and Belgian GAAP, PriceWaterhouseCoopers, Retrieved November 14 2005 from www.pwc.com/extweb/pwcpublications.


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