Capitalization of Initial fee related to franchising agreement

29 March 2010 8,250 views One Comment

We are planning to take Franchise of One Brand, for this we are paying following amounts :-

1)      Initial Fees – this we have to pay only once.

 2)      Royalty – Every Year it is payable @ % on sales.

 3)      Additional Fees – this fees we have to pay them if we open another location also.

We need your advice that can we capitalized 1st and 3rd and write off the period we are taking the franchise, like we are planning for 5 years

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