Question

On 1 January 2020, KOPPI CAFE acquired a franchise to operate ‘Mr. Kopi Tarik’ kiosk
for RM50,000. The franchise will last for 8 years. Upon acquisition of the franchise, the
following cost incurred:
RM
Training of the staff to make the ‘kopi tarik’ 3,500
Legal cost to register the franchise 6,800
Salaries to the staff 6,000
KOPPI CAFE also announced that the sales for its product had grown steadily
throughout 2019. The company claimed that its good name had contributed to the
tremendous increases in sales and wishes to incorporate this good name as goodwill in
the books at RM30,000 for the year ended 31 December 2020.
REQUIRED:
Explain the accounting treatment according to the situations above for the year ended 31
December 2020 on the following:
i) Franchise
ii) Other cost
iii) Goodwill

Answer 1

Answer:

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