Reference no: EM132695375

Be Our Guest GuestLodge, Inc. enters into a service agreement with the U.S. National Park Service. The contract gives GuestLodge the right to operate the Wilderness Lodge in a national park-an upscale hotel and restaurant lodge in the heart of a national park. GuestLodge must pay an upfront fee of $1 million to be used toward capital improvements in the lodge and for trail maintenance and parking lot maintenance. Per the Agreement, GuestLodge has the right and obligation to operate the lodge and must remit 10% of all gross sales to the National Park Service.

Problem 1: Evaluate the proper accounting and framework for this contract-is it a service concession arrangement? How does this impact your evaluation of whether the contract is a lease or how revenue should be recognized? Consider by analogy any public company filings

Tee Time GuestLodge, Inc. also has the right to operate a golf course near the national park. GuestLodge sells punch cards to the course, where customers can pay $500 to purchase a "10-Pack" (10 rounds of golf). The punch cards do not have a stated expiration date. Apply the five-step revenue recognition process to the sale of golf punch cards. Assume a customer purchased a 10-pack on 6/1/20x2