Part B – application question 8.24 Talking to the financial press about the David Jones 2010 earning

 
   

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Part B – application question 8.24

Talking to the financial press about the David Jones 2010 earnings from its department store business, its CEO acknowledged that it had been a tough time for the company due to the departure of its former CEO after sexual harassment claims against the former CEO. The current CEO said the company should be judged on two indicators: sales and share price. He distinguished between the man (the former CEO) and David Jones’ 170-year old brand. David Jones’ shares rose 2%.

Required:

(a) Do you agree that a company such as David Jones should be judged on sales and share price?

(b) Why is the distinction between the ‘man’ and the ‘brand’ important?

(c) If brands are so important to a company’s share price, why are internally generated brands not recognised under accounting rules?