Marvelicious Sdn Bhd is a local company based in Kampar, Perak. On 1 February 2020, Marvelicious Sdn Bhd signed an agreement to operate as a franchise of a well known fast food outlet. The initial franchise fee was RM900,000. The franchise agreement is for a period of 10 years. On 1 March 2020, before the franchise was opened, the company hired and trained new sales staff at a cost of RM100,000. It was expected that the benefits derived from the training could last for 4 years. The company’s financial year ends on 31 December each year. (i) According to MFRS138 Intangible Assets, one of the key criteria in the recognition of an intangible asset is ‘control’. Describe the meaning of ‘control’ in the context of intangible asset. (ii) Briefly explain the accounting treatment of franchise fee in accordance with MFRS138 Intangible Asset. (iii) Briefly explain the accounting treatment of pre-opening staff training cost in accordance with MFRS138 Intangible Asset.
Marvelicious Sdn Bhd is a local company based in Kampar, Perak. On 1 February 2020, Marvelicious Sdn Bhd signed an agreement to operate as a franchise of a well known fast food outlet. The initial franchise fee was RM900,000. The franchise agreement is for a period of 10 years. On 1 March 2020, before the franchise was opened, the company hired and trained new sales staff at a cost of RM100,000. It was expected that the benefits derived from the training could last for 4 years. The company’s financial year ends on 31 December each year.
(i) According to MFRS138 Intangible Assets, one of the key criteria in the recognition of an intangible asset is ‘control’. Describe the meaning of ‘control’ in the context of intangible asset.
(ii) Briefly explain the accounting treatment of franchise fee in accordance with MFRS138 Intangible Asset.
(iii) Briefly explain the accounting treatment of pre-opening staff training cost in accordance with MFRS138 Intangible Asset.
Step by step
Solved in 3 steps
