Reporting and disclosure requirements of a Franchise Fee
Does anyone know the correct accounting treatment and necessary disclosure in the financial statements for a one-off Franchise fee payment. The franchise agreement is for a period of five years. The Franchise agreement can be renewed at the end of five years, however there is no requirement to do so.
It is my opinion, that the Franchise fee paid (£8,500) is an intangible fixed asset and should be written off over 5 years (the term of the franchise agreement) on a straight line basis.
The company is a limited company and qualifies as a small company.
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