What type of asset has been bought?
I am preparing year end company accounts for 2 guys that started a bar.
The bar is in the basement of a restaurant. They signed a "management" contract for the right to operate the bar for 5 years in the restaurants basement. Note that the contract in question is not a lease.... or at least it is worded as if it is merely a licence to use part of the restaurants premises
However, there was somebody already operating a bar there and he had 3 years left on his contract. So they paid £16,000 for him to give up his right to use the bar.
So i have two questions - what would people classify this payment as in the accounts?
And secondly, do people think it it would obtain tax relief?
Many thanks for any help!
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