B is corrent. The requirement is to determine which of the following outflows should be expensed as incurred by the franchisee. Continuing franchise fees, based on revenues, should be reported as expenses when incurred.
A is incorrect. Continuing franchise fees, based on revenues, should be reported as expenses when incurred. This represents a direct franchise cost. Since direct franchise costs relate to the acquisition of the franchise, they should be capitalized and deferred rather than expensed.
C is incorrect. Continuing franchise fees, based on revenues, should be reported as expenses when incurred. This represents a direct franchise cost. Since direct franchise costs relate to the acquisition of the franchise, they should be capitalized and deferred rather than expensed.
D is incorrect. Continuing franchise fees, based on revenues, should be reported as expenses when incurred. This represents a direct franchise cost. Since direct franchise costs relate to the acquisition of the franchise, they should be capitalized and deferred rather than expensed.
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