Question
Arena Advertising - Burger Bills, a national fast-food restaurant, purchases advertising rights to advertise in-ice during hockey games at Jensen Arena. Recall that Jensen Arena
Arena Advertising - 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.
Please answer question C citing specific FASB codifications relating to the answer.
A. How should Burger Bills account for these advertising rights?
B. How should Jensen Arenta account for these 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 seasons (20 games), for both years of the contrtact. Purchased without advertising rights, these seats have a face value of $2,500 each, per season. Describe how this affects the recognition of Jensen Arenas's revenue.
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