Can a brand created by the company itself be recognized in the accounting records?
Many companies have spent years building a brand that today enjoys significant recognition in the market and represents one of their most valuable assets. This leads many business owners to ask whether that value can be reflected in their financial statements.
The Colombian Technical Council of Public Accountancy (Consejo Técnico de la Contaduría Pública), through Concept No. 0146 of 2026, addressed this question and confirmed the accounting treatment that must be applied under International Accounting Standard 38 (IAS 38) – Intangible Assets.
A brand’s value cannot always be reflected in the accounting records
It is common to find companies with well-known brands that build trust, attract customers, and represent a competitive advantage. In some cases, these brands may even be appraised by experts, yielding significant figures.
From an accounting standpoint, however, that value cannot always be recorded as an asset.
This is because, when a brand has been developed by the company itself, it becomes difficult to separate the cost of creating the brand from the company’s other ordinary business expenses, such as advertising, marketing, positioning, or commercial development. For this reason, International Financial Reporting Standards prohibit its recognition as an intangible asset.
Could an expert appraisal change this situation?
No. Even if a company hires a specialized appraiser to determine the commercial value of its brand, that appraisal does not authorize its recognition in the financial statements.
The appraisal may be useful for strategic, commercial, negotiation, or internal management purposes, but it does not change the criteria established under International Accounting Standard 38 (IAS 38) for the recognition of intangible assets.
Does it matter if the brand is very old or has significant economic value?
No, that doesn’t matter either. The Technical Council of Public Accountancy clarifies that the prohibition does not depend on the age of the brand or on the impossibility of determining its historical cost.
Even if a brand was created decades ago, enjoys strong market recognition, and generates significant economic benefits, it cannot be recognized in the accounting records if it was developed internally.
How can a company disclose information about its brand’s value?
Although the brand cannot appear as an asset on the statement of financial position, management may disclose additional information in the notes to the financial statements whenever it considers that information relevant to users.
These disclosures may include aspects such as:
- The existence of the brand.
- Its importance to the business.
- The performance of studies or appraisals for internal purposes.
- Its contribution to the company’s development.
However, these disclosures are purely informational and do not mean that the brand has been recognized in the accounting records as an asset.
What happens if the brand is sold?
Here, the treatment changes.
If a company sells its brand to another entity through an independent transaction, the buyer will be able to recognize it as an intangible asset, provided the requirements set out in International Accounting Standard 38 (IAS 38) are met.
This is because, from the acquirer’s perspective, the brand ceases to be an internally generated asset and becomes an asset acquired through a purchase, the cost of which can be measured reliably.
Conclusion
The Technical Council’s Concept reaffirms a fundamental principle of International Financial Reporting Standards: internally generated brands cannot be recognized as intangible assets, regardless of their age, their market recognition, or the economic value they represent.
While a specialized appraisal can provide useful information for decision-making, it does not change the accounting treatment established under International Accounting Standards. In these cases, the alternative is to provide supplementary information through the notes to the financial statements, whenever this is relevant to their users.
By contrast, when a brand is acquired through an independent transaction, it can be recognized as an intangible asset, provided it meets the recognition criteria set out in IAS 38.
Prepared By: Diana Guevara – Accounting Supervisor.
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