THE IMPACT OF BRAND VALUATION ON COMPANY'S FINANCIAL POSITION

Intangible assets represent important resource for most companies, especially in terms of company's brand, reputation in the market, intellectual capital, relations with suppliers and customers, etc. From accounting point of view, an asset can be presented in financial statements only if meets two criteria: (1) future economic benefits and (2) measurement reliability. If one of two mentioned criteria is not met, asset cannot be presented in the balance sheet. That is especially true for brand as an internally generated goodwill due to the fact that measurement of such asset is very demanding. Accounting for intangible assets is regulated by international and national accounting standards. According to Croatian and International accounting standards, intangible assets should be initially measured at their cost. Specific types of intangible assets such as intellectual capital, brand, customer lists, and supplier lists are considered as internally generated goodwill, wherefore the expenses related to these types of assets should not be capitalized as company's assets, but should be recorded as expense when incurred. Moreover, a problem that accrues in initial recognition of internally generated brand as a company's intangible asset is estimation of its useful life. In order to compare brand values among different measurement approaches, three independent agencies have been chosen in order to compare brand values of worlds' most famous companies from 2016 to 2019. Additionally, paper seeks to compare various approaches for valuation of a company value. In that context, companys' book value (total assets value), stockholders' equity, market capitalization, enterprise value, and brand value of the world's most famous companies have been analysed and compared. Research results showed that the brand value and the book value of the companies usually differs. At all observed companies, goodwill as well as intangible assets do not have significant share in total assets (book value of the company). Comparing the market value and enterprise value with the brand value, it can be concluded that for most companies market and enterprise values are greater than brand value up to 10 times. Moreover, a complete financial and non-financial analysis should be performed in order to evaluate which company is more valuable. Considering the fact that the brand is of great importance for company's business, additional efforts of experts in order to find adequate measurement model and adequate presentation in the balance sheet can be expected.