Where Do Franchises Go on the Classified Balance Sheet?

Purestock/Purestock/Getty Images

Franchises and licenses are non-financial, non-physical assets that reflect legal agreements allowing the franchisee or licensee to sell or market products or services developed by the franchiser or licensing company. Because they are intangible assets, they typically are found in the Other Assets section of the balance sheet.

The Balance Sheet

Balance sheet reporting differs slightly between countries. American companies typically produce balance sheets in two sections, with an Asset section balanced by a Liabilities and Shareholders' Equity section. Within the Asset section, you'll find three main sections: Current Assets, Fixed Assets and Other Assets. Intangible assets such as franchises and licenses are almost always found under Other Assets, but on some occasions may be included under Fixed Assets, depending on the complexity of the company's accounting and other factors.

References

Photo Credits

  • Purestock/Purestock/Getty Images