What type of asset should future services performed under a franchise agreement be recorded as?

Future services performed under a franchise agreement are recorded as intangible assets because they represent a potential future economic benefit resulting from the rights granted by the franchise. Intangible assets are non-physical assets that provide value and contribute to a company's revenue generation, such as patents, trademarks, and franchise agreements.

When a franchise agreement is established, it creates an intangible asset for the franchisee—specifically the right to operate a business under the franchiser's brand and use its business model. The benefits of this agreement, which include customer relationships and brand recognition, can enhance the franchisee's ability to generate income.

Additionally, these franchising rights may be recorded at their present value if a payment structure is established over time or if the franchisee is making an initial payment that will be amortized over the term of the franchise agreement. This approach allows the franchisee to reflect the value of the franchise in their financial statements accurately as it is an asset with a long-term benefit.

Options related to current liabilities, property, plant, and equipment, and operational costs do not appropriately capture the nature of the rights and future economic benefits inherent in a franchise agreement, which is why they do not accurately represent how future services under this arrangement should be recorded.