14. • Sintex Industries Ltd.
• Its 2005 annual report has a note that states:
• "In the year 2000-01, Sintex brand owned by the
company had been valued by Deloitte Haskins &
Sells, at a value as at the beginning of that year.
The value has been accounted for in the books by
debiting the Brand Value shown under the Fixed
Assets and by creating Brand Valuation Reserve
shown under Reserves and Surplus."
• The amount involved was Rs 165 crore.
14
15. • Emami Ltd stated in its 2005 annual report
that intangible assets had been valued as
on March 31, 2005 by Ernst & Young at
Rs 423 crore. This included Rs 265 crore
for brands. "Based on the said valuation,
the company's brands were accounted for
in the books of accounts in the year 1999-
2000. The resulting amount was credited
to Revaluation Reserve," states 15
Emami.
16. • Kitply's annual report of 2004-2005 spoke
of brand valuation done in June 2000 by
Ernst & Young. "This has resulted in an
increase in the book value of the brand by
Rs 127.6 cr which was credited to
Revaluation Reserve Account in that
year," it states.
16
17. • Ratan Tata, the head of IHCL (the Indian
Hotels Company) which owns the Taj
group of hotels disclosed that Taj group
has brand value of Rs 4000 crore in 2008.
17 17
19. • Vijay Mallya convinced conservative, SBI
to accept the Kingfisher airline brand —
registered separately from its beer and
wine brands — as collateral to raise Rs
2,000 crore in debt
• LT Foods (earlier called LT Overseas)
used its Daawat brand of packaged rice
as collateral to raise debt for its $50 Mn
(Rs 200 crore) acquisition of US-based
rice firm Kusha Inc.
19 19
23. IFRS 3-Std on Actg treatment of Goodwill
• Business combinations (except JVs)
• Goodwill
• is an asset acquired post acquisition and
• is initially measured as the excess of the cost of the
business combination over the acquirer's share of the
net fair values of the acquiree's identifiable assets,
liabilities and contingent liabilities. [IFRS 3.51]
23 23
24. • GOODWILL- Not reported as single asset
• GOODWILL has to be allocated to
different classes of IA
• BRAND
• OTHERS-patent, copyright, license,
franchise etc.
24 24
25. • IFRS 3 Prohibits amortization of goodwill
Instead Goodwill tested for Impairment
annually in accordance with IAS 36
• Goodwill recorded at cost less impairment
charges
• Report acquired intangibles separately in B/S
25 25
26. • all identifiable intangible assets (apt from
goodwill) are recorded at FV
• Separately identifiable
• Controlled by entity & Future CFs
• Trademarks, internet domain name, brand
• Royalty, franchise
• Patented techno, software
26 26
27. Impairment
Step 1: Compare FV of asset with its BV
• When FV > BV no impairment
• When FV < BV impairment of goodwill/IA
Step 2: compare implied FV with BV
Allocate the loss to the unit
27 27
28. Challenges
• Uniform BV method
• Valuing acquired as well as self generated
brands
28
