My client purchased an existing Franchise business (insurance) from another franchisee. The purchase cost was a lumpsum of $200,000.
This included all FFE and the book of business (Goodwill). Also, the previous owner (the seller) paid for the franchise cost of $40,000 initially when he had started the business 5 years ago.
Question:
In preparing the balance sheet of my client (the buyer)- Out of the $200k asset, can I assign $40,000 of franchise fees as an intangible asset?
Note that - My client (the buyer) did not pay any franchise fees to the seller or to the Franchisor.
This included all FFE and the book of business (Goodwill). Also, the previous owner (the seller) paid for the franchise cost of $40,000 initially when he had started the business 5 years ago.
Question:
In preparing the balance sheet of my client (the buyer)- Out of the $200k asset, can I assign $40,000 of franchise fees as an intangible asset?
Note that - My client (the buyer) did not pay any franchise fees to the seller or to the Franchisor.