Treatment of brand logo

Suppose a company launches a new brand logo or brand identity, expenses incurred by the company towards the cost of designing (which is substantial), registration and other legal cost and huge advertisement cost for launching the same, what should be the proper accounting treatment - whether it is to be capitalised as per AS 26 or expensed in P&L a/c. Please advice about the relevant provision under Income Tax Act and Companies Act with respect to the same.

Replies (7)

As per AS-26, Internally generated brands are not recognised as intangible assets and they are expensed out.

refer the attached file also.

But it does have a enduring benefit...

yes eventhough it has enduring benefit, AS-26 specifically mentioned that internally generated brands and customer lists will not be considered as Intangible Assets.

But the advertisement cost for launching that logo is so huge.Its about 20 Crores. So how can we expense such a huge amount?

It would be charged to P&L even the amount is substantial in the light of AS.

As per para 56 of AS 26 "INTANGIBLE ASSETS" if an ASSET satisfy all of the following conditions then it will be recognised as an Intangible Asset:

i) no physical substance

ii) used in the production of goods, services or rental to others

iii) identifiable (capable of sale)

iv) costs can be measured

 

NOTE: ASSET refers to resources which have future economic benefit and which are within control of the entity.

            
as per para 6 of AS26, advertisement exp are to be written off as and when incurred.

 

now u can decide, upon these parameters

thnku sourav

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