Managerial Accounting and Control Intangible Assets
Submitted to Prof. A. Kanagaraj
10/12/2011
2011PGP840
S. Shankar (SEC B)
EXECUTIVE SUMMARY
WPP groups is present in six service sectors which includes strategic marketing, media advertising, public relations, market research, non media advertising and specialist communications. forward to 1980s they had a strategy of global marketing to dissever themselves from the competitors. But Sorrell, the CEO, found the revenue from the global marketing was non enough. Therefore they started to diversify by acquiring small firms.
In 1987, WPP acquired JWT and Knowlton. They paid goodwill of £465 million. This left the balance sheet of WPP with shun assets. They eventually determine the brand value of a JWTs pitchers mound and Knowlton at £175 million.
In 1989, the firm bought O&M for $ 862 million. But the O&M brand name was valued £175 million. Therefore yet again the WPP had £600 million in long term debt and negative stockholders equity of £330 million.
PROBLEM STATEMENT
The happen upon issues in the case are
1. The Brand valuation of firms. It is relatively easier in a production firm (e.g. consumer goods) where the brand value post associated to the number of loyal customer who buys the products. But it is difficult in the case of a service firm (advertising agency). Therefore impersonal and scientific valuation is not possible.
2.
Difference in the score principles in UK and US
|Parameter |UK Accounting |US Accounting |
| grace Accounting |Goodwill is written off as cost against the |Goodwill is capitalized and the expense is |
| |share holders equity at the fourth dimension of merger or |matched to the future revenues from the merger.|
| |acquisition....If you want to get a full essay, order it on our website: Ordercustompaper.com
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