Costs incurred by the franchisor to provide initial and continuing services (for example,counseling by a registered dietician or advertising)are expensed in the same periods as the franchise revenue in accordance with the matching principle.

Question

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Expenses related to providing initial and continuing services to franchisors are recognized in the same periods as the franchise revenue to maintain consistency with the matching principle. This helps to match the expenses with the revenue generated from the franchise business.

Costs Incurred by the Franchisor to Provide Initial and Continuing