Cash accounting only applies to ordinary income and expenses.
Investment in longer-term assets has to be depreciated or amortized over the useful life of the assets.
The $42,000 you paid for the business appears to be goodwill, which is also an intangible asset and has to be amortized. Training for the franchise must also be included in the cost of the franchise, unless it is ordinary training during the course of your business.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
