Branding is one of the core features of today’s companies as it is the brand which gives identity, look, and feel. As the saying goes, “People buy brands, not products”, it is the brand which leaves a footprint in the minds of consumers, and it is the very same brand which customers align with. Typically, people identify with the brand more than they identify with any individual driving the brand.

Whilst accounting convention has not itemised brand value annually in the balance sheet, another intangible asset known as goodwill is captured on the balance sheet. Goodwill is a sort of catch-all account for all value that an acquisition holds above and beyond its basic book value (of which brands may only be one part).

Goodwill shows up on a balance sheet when two companies complete a merger or acquisition. When a company buys another firm, anything it pays above and beyond the net value of the target’s identifiable assets becomes goodwill on the balance sheet.