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Discuss the accounting treatment for the franchise

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Reference no: EM131820377

Problem

Archive bhd acquired a franchise on finance lease. it is required to pay 200000 per annum in advance for five years. the implicit interest rate is 10%. the franchise could be bought for 800000. The legal life is five years but can be renewed at 5000 for another five years. Discuss the accounting treatment for the franchise.

Reference no: EM131820377

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