Kuale Ltd is a healthy-food restaurant franchise that has been operating successfully in South Africa for more than a decade. Their menu is made to fit all kinds of diets and always a healthy variety of choices. The franchise gain its international popularity after a tweeted holding one of their products in the gym. The tweet subsequently boosted the company’s sales and profits and continues to do so. As a result, the owner of franchise is of the opinion that an amount of R1 million for goodwill relating to the product should be recognized as an asset in the annual financial statements of the company for the year ended 30 June 2022. Required: Discuss whether or not the owner of Kuale Ltd can recognize the R1 million as an asset (goodwill) in the annual financial statements. Your answer should include full definitions and recognition criteria as outlined by IFRS in the conceptual framework..
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