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Hi Mike!
IAS 38 prohibits the recognition of goodwill, brands and so on, stating that the internal cost of producing these items cannot be distinguished separately from the costs of developing and operating the business as a whole.
-Could you explain how the development of these intangibles cannot be differentiated from developing the business as a whole?
Thanks in advance
Goodwill grows with the passage of time and the growth in reputation of the entity. How do you propose allocating any of the costs of running a successful business to the asset of goodwill?
The same goes for brands – how do you allocate from other expense categories involved in bringing the entity’s products into the market place to the growth in the value of a brand?
The costs involved are pretty much inseparable from general costs that would be incurred anyway in the process of growing the business
Will that do for you?
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