COCA-COLA is worth $79.2 billion, according to Interbrand, a consultant. That does not seem excessive for the brand responsible for making Santa Claus look so jolly. But neither that number nor anything close to it appears on the company’s balance-sheet. “Trademarks with indefinite lives” (ie, brands) are worth just $6.7 billion, say the company’s accounts.
The reason is that both American and international accounting rules prohibit companies from recognising brands and many other “intangible” assets (such as customer lists) if they have created them themselves. Some marketers would like to change that. Roger Sinclair, who advises the MASB, an American body that sets marketing standards, points out that rules are inconsistent. The value of a brand—invisible when internally generated—is revealed when another company buys it.
Investors have a right to know how much brands are worth because so much of a firm’s future depends on them, Mr Sinclair argues. The conflicting standards treat brands rather as if they were electrons that can be in two places at once.