Most respondents to this question posed in the popular BV Professionals discussion group on LinkedIn say no, not only because it would be a “hard sell” to auditors (five years ago, as one commenter notes, who would have thought customers like General Motors could go away or Lehman Brothers lose its brand?).
- “I have a client whose customers are about as good a candidate for indefinite-lived as you can get. Some of their customers have been around for 50 years, and we (with management input) have given their customer relations a finite life. I think you would need to make a VERY strong case, and even then it may not fly with the auditors.”
- “We had a client whose customer contracts were ‘evergreen’ due to state legislation. It was hard for the auditors to argue with that.”
- “Even in the case of an ‘evergreen’ contract…I would suggest that state legislation could change in the future… Given the reality of relationships: they are ALL perishable, and…should NEVER have an indefinite life.”
- “As a rule I never say never. I began doing purchase allocations for financial reporting…back in 1995 and I have had only one case: a captive customer situation. If the customer went away, the business was out of business.”