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I wish to know how to treat the cost of acquiring an Insurance Brokerage License. Just the license to carry on business as an Insurance Brokerage Firm. I attempted to treat it an Intangible Asset under Non-Current Assets and also as Equity Contribution under Equity & Liabilities.
Please, kindly help with your opinions.
This doesn’t sound like a question relevant to FA (not indeed anywhere in the ACCA qualification as insurance brokerage is too specialised – a regulated industry). But to answer the principle of your question. The cost of obtaining a licence to operate is an intangible asset – so Dr Intangible asset and Cr Payable/Cash. This is the same as if you obtain a licence to use something like software.
Of course, if a license had to be renewed annually it would not be recognised as an asset (so Dr Expense instead).
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