Reference no: EM132808463

Problem 1: Presto is a public company that is in the process of signing a 10-year concessions agreement with the Stadium Owner. The agreement would give Presto the right and obligation to operate all of the stadium's concessions. Evaluate how Presto's (the lessee) lease scope assessment would be impacted if the arrangement were priced differently. For example, would you conclude that the arrangement is a lease if the contract is called a Management Agreement and the arrangement is priced such that Presto earns a fixed management fee of $100,000 per year? Assume in that case that all operating profit or loss would be borne by Stadium Owner (the lessor). What If Presto earns a fixed fee of $85,000 per year +1% of gross sales +10% of profits? how does this pricing affect your analysis of lease scope?