the definition of distribution of a service. And in accordance with article 185 of the Tax
code of Ukraine that the distribution of services, the place of delivery located on the
customs territory of Ukraine is subject to value added tax. Based on this, the franchisor
must accrue a tax liability [13].
Account mapping of franchise operations in the franchisee. The main
development of any country and the main factor of economic and political stability is
small business, which forms a significant share of GDP. Today, most franchisees are
small businesses.
Reflecting the operation of franchising to the franchisee is required to build the
model, which structurally consists of the following steps:
- purchasing of intellectual property rights;
- purchasing of equipment as collateral;
- accounting of start-up costs;
- obtaining additional services from the franchisor;
- royalty payment.
After signing the franchise agreement, the franchisee is entitled to use the
franchisor's trademark and skill and knowledge, and to conduct its business with a
successful, proven business concept. This right can be classified as an intangible asset,
as it corresponds to certain characteristics of an intangible asset P(S) of Accounting 8
" Intangible assets”:
• non-monetary asset;
• has no material form;
• can be identified [14].
As well as its franchisee has the right to reflect in the balance sheet, if there is a
probability of future economic benefits associated with its use, and its value can be
reliably determined. The probability of obtaining future economic benefits is not in
doubt, but determining the value is not always possible, it depends on the terms of the
contract, with respect to the payment for the use of intellectual property rights: if the
amount of payment is a fixed, value of an intangible asset can be set, and if it is set as
a percentage of profit, the value of the asset will not be known.
The basis for the implementation of operations for the acquisition of equipment is
the equipment pledge Agreement.
Before starting of its activity franchisee needs to learn a new production, that in
accounting is accompanied by the emergence of new costs – start-up costs.
According to the Standard provision for planning, accounting and calculation of
the cost of production (works, services) in the industry, the starting costs include: the
costs of checking the readiness of new production, shops and units for their
commissioning by means of comprehensive testing (under load) of all machines and
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