As is assumed that all the brand names have

As we can observe, this ratio has been reduced during theyears, because the group has stopped investing in plant and equipment. Thishappens because the firm is well-established in this sector as it has an activerole in more than 165 countries in all over the world. This practical meansthat they have already created a huge productive unit, including distilleries,warehousing functions, winery, bottling plants, sawmills, concentrate plant andcooperages. Also, the company possesses its standard office in Louisville, andbecause it wants to enforce its cash flows, the executives prefer leasingoffice spaces in the rest of USA and abroad in order to fulfill its businessactivities such as sales, marketing activities and administrative operationsinstead of direct purchasing which would be very costly.

Concerning the intellectual properties, they includetrademarks, know-how, copyrights, patents and priority manufacturing technologieswhich are powerful intangible assets of the firm and of course well-protected. However,Brown Forman has licensed some of them to third parties, in order to enhanceits brand name and with the purpose of earning profits. When the firm obtainsanother company, they first deliver the purchase price to identifiableliabilities and assets, involving intangible trademarks and brand names, basedon assessed fair value. Also, they report as goodwill any remaining purchaseprice. Intangible assets and Goodwill with indefinite lives are undeclared. Itis assumed that all the brand names have unlimited life. Once a year, all “immortal”intangible assets for impairment and goodwill are evaluated.

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If an asset’s bookvalue is bigger than its fair value, then the fair value is written down to itsestimated fair value.However, the method of the valuation which follows the firmis a big discussion. As it occurs from its financial elements, Brown Formanuses the method of fair values.

But is the right way for a big company in thisperiod, assessing with this method? For sure, it is a high risk nowadays due tofinancial crisis because the prices of buildings, lands and equipmentcontinuously fall down as a result the value of whole group decrease. Perhaps,it would be ideal a decade before, because the prices of these assets wereimportantly high, and for a big firm would be a perfect investment parallel asit would manage to develop its growth. But nowadays, this stance may be notrepresentative for its picture.Adopting historical costs, the value would benon-negotiable. They could maintain a stable value without concerning for theprices of the market, the way of their shares, and of course keeping thesebills stable in their financial statements. Generally, companies and especiallyhuge companies must select more safe ways in order to survive and to developduring the years, because if an impairment will occur, then they will have toface huge losses.

Today, there is the danger the current value of a buildingcompare with the purchasing price to be more less.