CERTYNEX IFRS ACADEMY

Norvelle group sets up a new subsidiary to start a bicycle rental business. It incurs legal costs to incorporate the company and start-up costs for the business before opening. How is this expenditure treated?

It is recognised as an intangible asset and amortised over five years.

It is recognised as goodwill in the subsidiary's accounts.

It is recognised as an expense.

It stays in assets until the first revenue, then is amortised.