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How should burger bills account for the advertising rights

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Question: Burger Bills, a national fast-food restaurant, purchases advertising rights to advertise in-ice during hockey games at Jensen Arena. Recall that Jensen Arena is still owned by the town of Springfield. In exchange for $60,000 per season, Burger Bills' logo will be displayed in the center ice for all games held at the Arena for 2 consecutive seasons. Burger Bills must pay for these rights at the beginning of each season. Four logos are displayed in the center ice at any given time, and Burger Bills' logo will be displayed per the contract in the upper-right location.

a. How should Burger Bills account for these advertising rights?

b. How should Jensen Arena account for the advertising rights?

c. Still responding from Jensen Arena's perspective, now assume that Burger Bills was also granted 2 club-level seats to each game during the season (20 games), for both years of the contract. Purchased without advertising rights, these seats have a face value of $2,500 each, per season. Describe how this affects the recognition of Jensen Arena's revenue.

Reference no: EM132716250

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