Comment: Bushmills and Reebok don't have much in common. However, there is a shared thread between them in that both have recently been acquired by new owners.

Since January 2005, international financial reporting standards (IFRS) require all European-listed companies to report the value of a far greater number of intangible assets, including brands, on their balance sheets in their December 2005 accounts.

Thus, a little over six months since the new standards came into effect, the new owners of Bushmills (Diageo) and Reebok (Adidas) will have to put a value of these acquisitions on their balance sheets. The new requirements will apply to acquired brands and the implications are proving significant for accountants and marketers.

Previously, acquired brands were not separately identified on the balance sheet, but were included under goodwill. However, IFRS now require that many more intangibles, including brands, be valued separately and presented on the balance sheet.

This must be done at a minimum for all acquisitions after January 1st, 2004, for the December balance sheet in 2005.

Internally generated brands can be valued, but are unlikely to be put on the balance sheet. Interestingly, this means that the Gucci brand is recognised as an intangible asset on the balance sheet of French owner PPR because it is an acquired brand.

However, the Louis Vuitton brand, which is a long-time internally generated brand, does not show up on the balance sheet of luxury goods company LVMH, although it accounts for over 40 per cent of the group's market capitalisation.

Therefore, anyone buying or selling a brand-driven business should have a much greater appreciation and assessment of brands and the people responsible for them.

For various stakeholders in listed companies, including the accountants and the marketers, there are some significant implications. Brands account for a large percentage of the market value of many companies.

Not surprisingly, accountants want to have more control over these assets and how funds are allocated to drive brand growth.

Inevitably, marketers have some difficulties in letting the so-called "bean counters" near the crown jewels.

Also likely to put some marketers under pressure is the fact that under IFRS, it will be necessary on an annual basis to consider whether the carrying value of "on balance sheet" brands has become impaired since their acquisition. If they have become impaired, this must be recognised in the profit and loss account in the year, depressing reported earnings with a possible consequence for share price.

Unfortunately and perhaps unfairly, IFRS rules do not allow any increases in brand value above the brand's initial acquisition value to be reported.

Marketers should familiarise themselves with this principle. For those involved in mergers and acquisitions, this impairment process could be used as a benchmark for measuring return on investment and possibly even help to monitor the performance of the marketing director.

IFRS also highlights yet again how essential it is to assess the real value of a target early in the transaction process. Corporate history is littered with examples of transactions where the perceived initial value of the deal mainly coming from the brands acquired was never realised.

Acquired brands cannibalise the existing portfolio, technology becomes obsolete, consumers reject the new brand owners as lacking credibility and investors end up attacking the acquirer's initial value on the brands in question.

In the 1990s for example, Quaker paid $1.7 billion (€1.4 billion) for the Snapple brand, outbidding all comers, including Coca-Cola. Quaker could not make Snapple work and a few years later, Quaker sold Snapple to Triarc Beverages for $300 million and heads rolled.

For marketers, IFRS represents something of a crossroads. No one doubts that marketing has become more complex and refined since the days of men on surfboards selling pints of stout.

However, in the longer term, creativity and strategic ability alone are unlikely to be enough to justify the marketing director's presence in the boardroom.

Those in the business of buying and selling brand-driven companies are looking for more from those responsible for brands.

They are looking for marketers to become more financially literate to keep pace with their financial colleagues. In the context of new financial reporting standards, there is a need for marketers to do more to show how brands drive long-term customer loyalty, build supplier and consumer trust and ultimately create more shareholder value.

More than ever before, marketers need to arm themselves with strong financial measurement skills if they are to stay in the boardroom with their brands.

Robert Dix is head of transaction services at KPMG.