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1993 SNA Update Information - Country comments for issue:
Goodwill and other non-produced assets

Issue description
Issue description in [English] | [French] | [Russian] | [Spanish]
The 1993 SNA records goodwill (as purchased goodwill) only when an enterprise is sold. and it treats purchased goodwill for corporations and unincorporated enterprises differently. Should goodwill continue to be recognized only when purchased or should internally generated goodwill be recognized? Should purchased goodwill be treated the same way for corporate and unincorporated enterprises? Should the balance sheet recognize assets such as brand names, trademarks, franchises, etc.?
Country comments
Number of country comments for selected issue:31
  Date postedSourceComment
 10/10/2006SwedenAgreement with proposal
 9/15/2006United KingdomWe agree with all the recommendations made by the AEG.
 9/15/2006LatviaAfter deep discussions and expert consultations we basically support the 1993 SNA Update Issues.
 8/18/2006ItalyWe agree with the current proposal to introduce some clarifications on the nature of goodwill, but to otherwise leave SNA essentially as it is, i.e. to record only purchased goodwill, even though this is seen by many as only a practical second best solution.
 7/28/2006LithuaniaIn general we support the recommendations.
 7/27/2006EgyptThe goodwill should be considered only when it is purchased or solid as is the case in present SNA.
 2/23/2006South African Reserve Bank We agree in general with the AEG recommendations, but foresee some difficulties with the valuation issues and to what extend one should rely on accounting data.
 12/22/2005Serbia and MontenegroWe agree with the suggested changes.
 12/14/2005FranceL'INSEE soutient la recommandation consistant à
- traiter le goodwill comme un actif non produit et ne l'enregistrer qu'au moment ou il est mis en évidence à l'occasion d'une vente (maintient su SCN 93) ;
- adopter une méthode unique de mesure, quel que soit le statut de I'entreprise ;
- faire apparaître un nouveau poste de la nomenclature incluant les « marketing assets » (marques, franchise) qui peuvent être vendus indépendamment de I'entreprise.
 12/13/2005CanadaCanada has some issues with this proposal. Putting the tag goodwill and marketing assets implies that any residual value between book value assets and sale value of the entitiy would fall into one of these two categories. In fact the residual value may reflect under-valued R&D assets and the fact that the book value of other assets recorded by the firm (in business accounting as per IASB) are under valued relative to their true market price. Also, there may be some production associated with marketing assets. As was argued by one paper submitted to the Canaberra group by Statistics Canada, the success of a pure R&D type discovery is followed not only by development expenditures but investments in marketing assets to take the product successfully to market. In addition to this, a residual value approach could also reflect the value of purchasing the human capital element of a successful R&D team of the entity being purchased. All of this is to say that intangibles have still not been fully scoped out in this revision. It might be wiser to change the title to goodwill and other intangible assets, but other may include produced and non-produced elements. The manual should include some recognition that further work needs to be done on intangibles and articulating the residual value into the revaluation component of book-to-market value from business accounts and articulating the components of other intangibles.
 12/12/2005Bank of KoreaWe agree to all the recommendations.
 12/9/2005RussiaRosstat largely supports the recommendations on the updating 1993 SNA, made at the July 2005 meeting of the Advisory Expert Group on National Accounts.
 12/5/2005Denmark m3Denmark22;
 12/2/2005NetherlandsWe generally support the recommendations of the AEG.
 12/2/2005AustraliaAustralia accepts the compromise position agreed to by the AEG.
 12/2/2005TurkeyWe agree with the recommendations made at the July 2005 meeting of the Advisory Expert Group on National Accounts.
 12/1/2005GermanyWe agree with the conceptual principle of the AEG recommendation. However we do see a problem to calculate the value of purchased goodwill in the above manner on an individual basis. National Accounts does process macro data, but cannot calculate assets for singular businesses. Therefore we advocate to value purchased goodwill and marketing assets on the basis of statistical data to be gained in accordance with the IAS and IFRS.
 12/1/2005NorwayWe agree with the AEG recommendations.
 12/1/2005BrazilWe endorse the AEG decisions in the Bangkok meeting.
 12/1/2005IsraelWe agree with the recommendation to classify goodwill and marketing assets as one category and to add clarifications on the nature and scope of these items. Since only purchased goodwill is estimated, the national accounts series on this item will necessarily not be very useful for many purposes, but we recognize that it may not be possible to have good estimates for goodwill that is not purchased. Hopefully a recommendation to change the term “non-produced” will be given by the AEG in the future.
 12/1/2005Hong Kong, China• We agree with the AEG's recommendation that the purchased goodwill and marketing assets should be combined under the same asset category.
• However, the AEG's recommendation to include only purchased goodwill and marketing assets as non-produced assets (i.e. those goodwill and marketing assets generated internally are not included) may not be very desirable, since the period to period change in the estimate so compiled will reflect mainly the sale and purchase activities of companies in the periods concerned. The data series will be highly volatile due to the variation in the amount of sale and purchase activities from one period to another.
• Furthermore, since most goodwill and marketing assets are generated internally within companies, their effect will not be captured in the estimates so compiled. We therefore suggest that more research should be done to estimate the market value of internally generated goodwill and marketing assets despite the difficulties involved.
• The starting point of the research might be on the easier topics of marketing assets such as brand names and trademarks, as nowadays it is not uncommon for companies to invest a large amount of money in the building of brand names, through advertisements, sponsorships, and other public relations events. More research is needed to separately identify the brand building expenses as investment (i.e. benefit more than one year) from current operating expenses (i.e. benefit in the current year only). Consideration might be given to focus on sectors with a significant amount of brand building expenses, such as retail trade of clothing, manufacturing of electronic appliances, motor vehicles, mobile phones. Consultation with people in the trade is suggested to be carried out to understand more about the factors affecting the amount of money they spend on building brand names, so as to derive some estimation method for splitting the expenses into investment and intermediate consumption.
 12/1/2005United KingdomWe agree with all the AEG decisions. Guidance will be needed on the measurement and valuation of these concepts. National accounts will need to use accounting data as its source in many cases.
 11/30/2005Slovak RepublicSO SR agree with AEG recommendations.
 11/30/2005ItalyIstat fully agrees with the recommendations made at the July 2005 meeting of the Advisory Expert Group on National Accounts.
 11/30/2005State Bank of PakistanWe have gone through recommendations made by Advisory Expert Group (AEG) and fully agree with them.
 11/30/2005State Bank of VietnamGoodwill should be recognized only when purchased. Purchased goodwill should be treated in the same way for corporate and unincorporated enterprises.
 11/29/2005People's Bank of ChinaI agree with your improvements and have no other suggestions.
 11/25/2005VietnamGoodwill should be recognized only when purchased. Purchased good will should be treated in the same way for corporate and unincorporated enterprises.
 11/21/2005USAWe agree with the AEG recommendations to include marketing assets along with purchased goodwill as a non-produced asset, to clarify the economic nature of these assets, to apply valuation principles consistently, to continue to exclude internally generated goodwill and marketing assets, and to apply an impairment test consistent with international accounting standards.
 4/1/2005PolandIn the scope of goodwill and other non-produced assets we are on the position that proposed wider treatment of this issue, it means taking into account in calculations of the value of the capital stock also this part of the goodwill that was produced inside the company (trade marks etc. ), will cause many troubles with valuation of the particular assets.
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