Can rebranding costs be capitalised under FRS102?

Client pays an external agency to rebrand its business - can that cost be capitalised?

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My client is rationalising his business(es). As part of that rationalisation and restructure he has paid an external agency to create a brand.

This includes logo, name, roll out materials etc.

Can those rebranding costs be capitalised?

Separately the website has gone through a comprehensive redesign - can the website development costs be capitalised?

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By DKB-Sheffield
02nd Sep 2023 18:31

In answer to the original question "Can rebranding costs be capitalised under FRS102?" the answer is almost certainly "yes" - in certain circumstances, and to a certain extent.

HOWEVER... can they be capitalised in this specific case... and should they be capitalised in this specific case... I wouldn't like to say!

Assuming you are looking at these being an Intangible Asset, you need to assess the recognition based upon the criteria in 18.4 (FRS102). Each cost item will need to be assessed on it's own merits for the purposes of PROBABLE future economic benefit, and RELIABLE measure of value.

For the re-branding... what is actually being created? Is it merely a pretty logo, or is it a recognised trademark with a 'carrying value'?

For rollout materials these sound like advertising... maybe some 'stock' style element... no idea. What life do they have... indeed what value do they have post-rollout?

It can get interesting when you consider the website. You need to consider what the website does! If it is purely a 'business card/ portfolio style site', how can you reliably determine the future economic benefit... or even the value of the site. However, a fully-functioning online shop or marketplace (which IS the business, or a large part thereof) may have a more distinct link to future income. Additionally a 'facelift' of an online shop as opposed to a full revamp (akin to repainting a physical shop as opposed to building a complete new layout) is likely more a P&L 'R&M-style' cost, than capital outlay! I'm not suggesting coding website updates to R&M... it's a comparison to a physical shop unit!!!

Clearly a lot to consider, and that's without starting to consider the tax side.

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Replying to DKB-Sheffield:
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By TOSullivan
02nd Sep 2023 21:49

Thanks for your response.

One of the reasons I asked the question is because FRS 102 specifically states that internally generated brands should not be recognised.

The question then is this internally generated?

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Replying to TOSullivan:
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By tom123
03rd Sep 2023 08:37

That relates more to notional value of brands if you were to sell it, rather than real life costs you have incurred

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