CASE 10-1 WHAT IS A LIABILITY?

Professional athletes resularly sisn long-term multimillion-dollar contracts in which they promise to play for a particular team for a specified time period. Owners of these teams often sign long-term leases for the use of playing facilities for a specified time period. GAAP often requires the leases to be booked as liabilities but does not require the obligations associated with pro athletes' contracts to be recorded.

Discuss the reasons for the differing treatment of these two seemingly similar events. Do you think the accounting treatment currently required by GAAP in these instances satisfies the