Implementing Accounting Analysis - Assignment Example

Q.5 Value of Brands The value of brand can be established by various methods among which the following are more conventional. Firstly, the value of brands can be established by the premium price which is charged for the branded products the company sells. Secondly, present value of advertising cost can be used to convert the value of unbranded products into branded ones. Thirdly, industry practices might be used to determine the value of brands and such values can be inferred from latest mergers and acquisition.

Underlying AssumptionsThe following are some of the underlying assumptions that are used in establishing the value of brands:1) The products will be valued as branded by the customers. 2) Companies would aim to maintain the similar value of the brands in the future and 3) Heavy advertising costs will going to be incurred by the companies to keep the branded status of the productsQ.6ImpairmentImpairment is a concept which denotes the decrease in the value of asset without the use of that particular asset.

The value of the asset is decreased not because of using that asset but for any other indicator. The following are some of the indicators that cause impairment in assets to occur.Government InterferenceThe value of asset can be declined in case of government putting some sort of restrictions or ban on the use of the asset.Technological ChangeDue to innovation in technology, the market value of the existing may decline, as the new asset may be available for use.Physical DamagePhysical damage or deterioration in the assets may lead to decline the value of asset without even using that asset for its useful life.

ReferencesPalepu, Krishna G, Victor L Bernard, and Paul M Healy. Business Analysis & Valuation. 1st ed. Cincinnati, Ohio: South-Western college Pub., 1996. Print.