Journal of Management Research

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Fudged Accounting Theory


Affiliations
1 University of Windsor, Odette Business School, 401 Sunset Avenue, Windsor, Ontario N9B 3P4
     

   Subscribe/Renew Journal


The topic of accounting for intangible assets such as trade marks, patents, brands and goodwill has been highly controversial in the accounting profession for many years. Furthermore, the accounting treatment of brands has importance for marketers. Until recently, the flexibility within the regulations allowed companies to use a variety of accounting treatment and this led to the generation of fudged accounting theory (Murphy, 1990). This empirical study based on recent accounting regulatory changes for intangible assets in the UK examines the validity of the theory in the food, drink and media industries. The analysis demonstrates that companies are moving from the capitalization of brands to that of goodwill. Policies in respect of amortisation are, however, more divergent and fudged accounting theory still applies. The UK approach is being regarded with interest by the International Accounting Standards Committee and fudged accounting theory may be generalisable in different accounting regimes.

Keywords

Intangible Assets, Tangible Assets, Brands, Goodwill, FRS 10, Fudged Accounting, Food/ Drink/Media Industries
User
Notifications

  • Accounting Standards Board (1997), FRS 10 Goodwill and Intangible Assets, London.

  • Accounting Standards Board (1998), FRS 11 Impairment of Fixed Assets and Goodwill, London.

  • Accounting Standards Committee (1989), SSAP 22 Accounting for Goodwill, London.

  • Archer, S., Alexander, D., Collins L., and Pham, D. (1995), The Treatment of Goodwill and Other Intangibles: Theory, Standards and Practice in France and the UK, Institute of Chartered Accountants England & Wales (ICAEW), London.

  • Arnold, J., Egginton, D., Kirkham, L., Macve, R., and Peasnell, K. (1992), Goodwill and Other Intangibles, ICAEW, London. Arthur Andersen (1992), The Valuation of Intangible Assets, p.254, London.

  • Barwise, P., Higson, C., Likierman, A., Marsh, P. (1989), Accounting for Brands, ICAEW/London Business School, London.

  • de Chernatony, L. and McWilliam, G. (1989), The Strategic Implications of Clarifying How Marketers Interpret Brands, Journal of Marketing Management 5(2): 153-171.

  • Egan, C. and Guilding, C (1994), Dimensions of Brand Performance: Challenges for Marketing Management and Managerial Accountancy, Journal of Marketing Management 10: 449-472.

  • Egginton, D. A. (1990), Towards Some Principles for Intangible Asset Accounting, Accounting and Business Research 20(79): 193-205.

  • Guilding, C. and Pike, R. (1990), Intangible Marketing Assets: A Managerial Accounting Perspective, Accounting and Business Research 21 (18): 41-49.

  • Grinyer, J., Russell, A. and Walker, M. (1991), Managerial Choices in the Valuation of Acquired Goodwill in the UK, Accounting and Business Research 22 (85): 51-55.

  • Haigh, D. (1996), Brand Valuation: A Review of Current Practice, Institute of Practitioners in Advertising, London.

  • Hall, R. (1992), The Strategic Analysis of Intangible Resources, Strategic Management Journal 13: 135-144.

  • Hart, S. and Murphy, J. (1998), Brands, The New Wealth Creators, MacMillan, Basingstoke, UK.

  • Hussey, R. (1994), Undervalued Intangibles, Touche Ross, London.

  • Hussey, R. and Ong, A. (1997), Food, Drinks and the Media: Accounting for Goodwill and Intangible Assets, Journal of Brand Management 4 (4): 239-247.

  • International Accounting Standards Committee (1998), IAS 22 Business Combinations , London.

  • International Accounting Standards Committee (1998), IAS 38 Intangible Assets, London.

  • Kapferer, J.N. (1997), Strategic Brand Management (2nd Ed), Kogan Page, London.

  • Mather P.R. and Peasnell, K. V. (1991), An Examination of the Economic Consequences Surrounding Decisions to Capitalize Brands, British Journal of Management 2: 151-164.

  • Muller, K. (1999), An Examination of the Voluntary Recognition of Acquired Brand Names in the United Kingdom, Journal of Accounting and Economics 26: 179-191.

  • Murphy, J. (1990), Brand Valuation – Not just an Accounting Issue, ADMAP (April): 36-41.

  • Oldroyd, D. (1994), Accounting and Marketing Rationale: The Juxtaposition Within Brands, International Marketing Review11 (2): 33-36.

  • Ong, A. (2000), Accounting for Intangible Assets in the Food, Drink and Media Industries in the UK, unpublished PhD thesis, University of West of England, UK.

  • Power, M. (1990), Brand and Goodwill Accounting Strategies, Woodhead Faulkner, London.

  • Tollington, T. (1998a), Brands: The Asset Definition and Recognition Test, Journal of Product and Brand Management 7 (5): 180-192.

  • Tollington, T. (1998b), Separating the Brand Asset from the Goodwill Asset, Journal of Product and Brand Management 7 (4): 291-304.

  • Tollington, T (1999), The Brand Accounting Side-show, The Journal of Product and Brand Management 8 (3): 204-218. Touche Ross (1993), Goodwill and Intangible Assets: The Touche Ross View, London.


Abstract Views: 557

PDF Views: 2




  • Fudged Accounting Theory

Abstract Views: 557  |  PDF Views: 2

Authors

Audra Ong
University of Windsor, Odette Business School, 401 Sunset Avenue, Windsor, Ontario N9B 3P4

Abstract


The topic of accounting for intangible assets such as trade marks, patents, brands and goodwill has been highly controversial in the accounting profession for many years. Furthermore, the accounting treatment of brands has importance for marketers. Until recently, the flexibility within the regulations allowed companies to use a variety of accounting treatment and this led to the generation of fudged accounting theory (Murphy, 1990). This empirical study based on recent accounting regulatory changes for intangible assets in the UK examines the validity of the theory in the food, drink and media industries. The analysis demonstrates that companies are moving from the capitalization of brands to that of goodwill. Policies in respect of amortisation are, however, more divergent and fudged accounting theory still applies. The UK approach is being regarded with interest by the International Accounting Standards Committee and fudged accounting theory may be generalisable in different accounting regimes.

Keywords


Intangible Assets, Tangible Assets, Brands, Goodwill, FRS 10, Fudged Accounting, Food/ Drink/Media Industries

References