Expenses in franchise

Expenses in franchise

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Hi Everybody,

The company pay £200,000 for ten years licence fees in franchise. Accroding to the franchise agreement, the company must pay £8,000 for staff training and £4,000 for the equipment from franchisor in the first year of franchise. 

My question is: how to account for staff training fee and the equipment? Should both (training and the equipment) be capitalised as intangible assets with licence fee or something else?

Thank you in advance,

Dan

 

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paddle steamer
By DJKL
30th Sep 2016 10:08

Equipment, if owned, should be in Tangible Fixed assets not Intangible Fixed Assets, but you need to be clear, do you purchase the equipment, does it belong to you or do you merely get to use it?

Staff training is an expense and should not go anywhere near the balance sheet but be charged to the expense account- staff training.

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