Here is an extract from the Reckitt Benckiser 2000 Annual Report: The accounting policy states: Acquired brands
Question:
Here is an extract from the Reckitt Benckiser 2000 Annual Report:
The accounting policy states:
Acquired brands are only recognised on the balance sheet as intangible assets where title is clean brand earnings are separately identifiable, the brand could be sold separately from the rest of the business and where the brand achieves earnings in excess of those achieved by unbranded products.The value of an acquired brand is determined by allocating the purchase consideration of an acquired business between the underlying fair values of the tangible assets, goodwill and brands acquired.
Brands are not amortised, as it is considered that their useful economic lives are not limited.Their carrying values are reviewed annually by the directors to determine whether there has been any permanent impairment in value and any such reductions in their values are taken to the profit and loss account.
A note to the accounts states:
A brand is only recognised where it is supported by a registered trademark, is established in the market place and holds significant market share.
Given the materiality of the brands (these include products such as Dettol, Air Wick, Calgonit-2-in-1, Lysol, Dettox, Finish, Vanish, Harpic) in relation to the total shareholders' funds, discuss the information that you consider appropriate to be disclosed in the annual report in orderto assess the level and nature of risk to an investorLO18-4
Step by Step Answer:
Financial Accounting And Reporting
ISBN: 9780273703648
10th Edition
Authors: Mr Barry Elliott, Jamie Elliott