Original Research

Non-recognition of internally generated brands: implications for the usefulness of financial statements

Pieter Van Aardt Van Der Spuy
Journal of Economic and Financial Sciences | Vol 8, No 3 | a123 | DOI: https://doi.org/10.4102/jef.v8i3.123 | © 2018 Pieter Van Aardt Van Der Spuy | This work is licensed under CC Attribution 4.0
Submitted: 21 December 2017 | Published: 27 December 2015

About the author(s)

Pieter Van Aardt Van Der Spuy, School of Accountancy, University of Stellenbosch, South Africa

Full Text:

PDF (144KB)


International Accounting Standard 38 (IAS38) prohibits the recognition of internally generated brands as assets. This article explores the implications of this prohibition for the usefulness of financial statements, focusing on the implications for note-disclosure. A theoretical doctrinal research approach is taken in which the literature on intangible assets and current accounting standards is examined and evaluated. The article highlights the information content relevant to unrecognised brand assets that is not currently disclosed to users of financial statements. Furthermore, the article argues and explains how this situation may compromise the usefulness of financial statements. Practitioners compiling financial statements may find the conclusions and recommendations useful in improving voluntary note-disclosure when a reporting entity owns significant unrecognised brand assets. The International Accounting Standards Board (IASB) may find the article useful in reviewing IAS38’s mandatory note-disclosure requirements in order to improve the usefulness of financial statements.


internally generated brands; International Accounting Standards Board (IASB); The Conceptual Framework for Accounting; trademarks; asset recognition; voluntary disclosure


Total abstract views: 2985
Total article views: 1478


Crossref Citations

1. The underlying concepts of the definition of a liability in financial reporting: A doctrinal research perspective
Daniël Coetsee
South African Journal of Accounting Research  vol: 35  issue: 1  first page: 20  year: 2021  
doi: 10.1080/10291954.2020.1742458