Fair Value Accounting in a Thawing Economy

October 24, 2008

As the credit markets finally show encouraging signs of thawing on Monday, the Dow Jones surged 4.7%, only to fall the rest of the week with a small rally at the end of the week. Most analysts cautioned that the light at the end of the tunnel is further away than it may appear, and would look to be correct. Analysts will argue time frames of months to quarters in regards to when the financial situation will solidify and start a dependable upwards trend again. What does this financial roller coaster mean for corporate brands? What can leadership and employees do, brand-wise, to ensure that their companies weather the storm?

Brands that have a solid foundation in financial transparency towards investors and shareholders, and a firm reputation among consumers, are in the best position to weather this current economic storm.

Unfortunately for several industries, this stable position is not present. This can be clearly seen in the financial industry, as one institution after another threatens to come apart at the seams. One solution might be to implement fair value accounting. By utilizing a “fair value” accounting basis, companies can better calculate their bottom line by determining the value of intangible assets. This is especially important in terms of intangible assets, where the brand equity resides.

The Financial Accountings Standards Board (FASB) is in the process of creating methods for fair value accounting of intangible assets, making steady progress in defining intangible assets and their value within a company. To learn more about their efforts, FASB’s Statement of Financial Accounting Standards number 142, published in June of 2001, goes into greater detail the efforts of fair value accounting for goodwill and other intangible assets.

CoreBrand’s methodology, consistently tracked since 1990, has been based on proving the importance of fair value accounting, and how to accurately and consistently measure, manage, and leverage intangible assets.

blog comments powered by Disqus
Brandlogic and CoreBrand have become Tenet Partners — Where brand meets innovation®. More