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Vadapav Ltd. (a franchisor) acquires its franchisee Efficient Ltd. The license terms reflect current market rates. Account for the franchise right at the acquisition.
ARecognise a reacquired right as a separately identifiable intangible at acquisition-date FV; no settlement gain or loss because terms are at market
BRecognise a settlement gain equal to the contract's remaining unamortised carrying amount
CReverse the original franchise grant and remeasure all prior periods
DSubsume the franchise into goodwill
Answer & Solution
Correct answer: A. Recognise a reacquired right as a separately identifiable intangible at acquisition-date FV; no settlement gain or loss because terms are at market
A reacquired right is an identifiable intangible recognised separately from goodwill. Settlement gain/loss arises only when contractual terms are off-market — here they are at market, so no settlement effect.
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