As we have progressed into the twenty-first century, the valuation of firms has continued to evolve. During the nineteenth and for much of the twentieth century, value, notionally represented by the net book value of assets on the balance sheet, was heavily dependent on so-called hard assets such as plant and equipment. For the past several years, how-ever, the gap between market capitalization and net book value has increased to enormous proportions-driven largely by the importance of intangible assets. These intangibles pose a crisis for the accounting profession-placing a value on brands, customers, patents, or a skilled or productive workforce is much more difficult than recording the depreciated value of a piece of equipment. Managers always tend to focus more attention on things they can measure than those they cannot (Hulbert, Capon & Piercy. 2005).

One of the great challenges in marketing is that there is no uniform definition of brand: There are three different concept of brand. First there are logos and associated visual elements which are used to differentiate one company’s products and services from another (Haigh 2008).

The question raised is as to what type of profession is best qualified to analyze intangible assets. This question is frequently asked and forcefully debated. However, the answer to this question, to the extent that there is an answer, will not meaningfully further the discipline of intangible asset analysis. Economists, accountants, appraisers, engineers, financial analysts, license intermediaries, and other professionals have all made claim that their skills are most relevant to the valuation and analysis of intangible assets (Reilly $ Schweihs 1998).

Some commentators argue that the Mercedes brand would be incomplete if it were separated from the other tangible and intangible assets used to build Mercedes products.

The reason behind this argument is that large bundle of intangibles should be included in the definition of brand because consumer loyalty is created over a long period by many touch points and consumer experiences.

The application of this definition animates the fall out between traditional accounting practitioners and many intellectual capital proponents. This conflict originates from the fundamental differences between accepted practices in accounting profession and the intangible nature of intellectual capital and financial reporting. Both school of taught, do not agree on the validity and reliability of the empirical tests available to identify and value intellectual capital, nor they achieve a consensus on whether the materiality of omitting intellectual capital outweighs the need to own them outright (Edvinsson et al, 1998)

Through branding, firms create value. Spending on different types of intangibles is associated with increase in the future profitability or current equity market of the firms involves. Generally, it can be seen that there are strong and economically consequential empirical relations between a wide scope of input measures of intangibles and a variety of output, particularly corporate profitability and equity market values. Brands, a major intangible prevalent in consumer products-electronics (Sony), food and beverages (Coca-cola), and more recently in internet companies (AOL, Yahoo!, and Amazon) are often created by a combination of innovation and organisational structure (Hand & Lev 2003).

Some commentators have interpreted the intellectual property rights included in the definition of brand very widely indeed. Tangible as well as intangible rights have been referred to as integral components of brands (Haigh 2008).

There are two critical questions to answer in brand valuation. First we look at what is being valued. Are we valuing the trademarks, the brand or the branded business? The second important question is the purpose of the valuation.

A branded business valuation is based on a discounted cash flow analysis of future earnings for that business discounted at the appropriate cost of capital. The value of the branded business is made up of a number of tangibles and intangible assets.

The accounting treatment of brands has been a matter of controversy for some years. IAS 38 intangible assets have now ended then controversy by stating that internally-generated brands and similar assets may never be recognised.

Intangible assets are nonfinancial assets without physical substance that are held for use in production or supply of goods or services or for rental to others, or for administrative purposes, which are identifiable and are controlled by the enterprise as a result of past events, and from which future economic benefits are expected to flow (Epstein & Mirza, 2005).

There exist two main types of intangibles; internally generated and purchased (externally generated intangibles (ACCA Textbook, 2008/09). Internally generated intangibles such as research and developments assets, goodwill and brands are hard to recognise in the balance sheet than those that are purchased externally by an entity which has historical cost (Epstein & Mirza, 2005). Expenditure on internally-generated brands cannot be distinguished from the cost of developing the business as a whole, so it should be written off as incurred. Where a brand name is separately acquired and can be measured reliably, then it should be separately recognised as an intangible non-current asset, and accounted for in accordance with the general rules of IAS 38 (ACCA 2008/09)

The growing importance of intangible assets in determining the value of a company has been the subject of much discussion since the second half of the 1990s. As the so-called knowledge company emerged, so it was recognised that there was a growing disparity between market value (essentially the capitalisation as indicated on the stock exchange) and book value (what is expressed in accounts). The value of people is just one aspect of this disparity. Brand, reputation, customer relationships, net-works and patents can all be described as intangible assets and all have an effect on market value. The increase importance of such assets poses a major challenge to existing methods of accounting and valuation. The scale of that challenge is reflected in the size of the gap (Sloman 2003).

• Hulbert J. M., Capon N. & Piercy N. (2005): Total integrated marketing: Breaking the bounds of the function
• Hand J. R. M. & Lev B. (2003): Intangible assets: values, measures, and risks. Oxford university press
• Reilly R .F. & Schweihs R. P., 1998, Valuing intangible assets, McGraw-Hill Professional
• Sloman M. (2003): Training in the Age of the learner, CIPD
• Haigh D. (2008): Brand valuation. Uk Chartered Institute of Marketing
• ACCA Textbook (2008/09): Financial reporting paper F7. Kaplan publishing
• ACCA Textbook (2008/09): Corporate reporting paper P2. Kaplan publishing
• Epstein, B. J. & Mirza, A. A. (2005): Interpretation and Application of International Accounting and Financial Reporting Standards (IFRS). John Willey & Son Inc., New Jersey, United State
• Roos, J., Roos, G. , Dragonetti, N. , & Edvinsson, L. (1996). Intellectual Capital: Navigating in the New Business Landscape. New York University Press, New York, USA