A conceptual study on brand valuation

Recognizing brands on the company’s financial statement as an identifiable intangible asset is a relatively recent development in financial reporting, which only became a focus of attention in the late 1980s. Accounting bodies throughout the world have appeared uncertain as to how to treat the issue of placing a brand in the financial statement as there is little guidance and less understanding over accounting treatment of brand valuation. The debate over procedures for valuing brands and including them as a fixed asset to the corporate financial statement has become a great controversy. As a descriptive study, the present conceptual study highlights the problems associated with brand valuation. Many corporate companies support the fact that valuing and hence capitalizing their brand bring a lot of advantages to the organization. The present study examines four main methods of valuing brands, namely the cost‐based method, market‐based method, income‐based method and formulary method. The method used in every valuation is subject to the suitability of the brand condition determined on their existing uses. A few recommendations based on the conceptual study are made in order to meet the needs of organizations and the business community as well.