Revenue's Up Dude! The University of Maui (the "University'), a private institution, has the best college- level surfing team in the country and has enjoyed fame and notoriety from the team's success. The Luau Bank (the Bank), the largest bank in the state, approached the University with an offer to enter into an agreement for affinity bankcards. The bankcards would feature the logo of the University on the card. The University has accepted the agreement. The agreement provides the Bank with the exclusive right to use the names, trademarks, copyrights and logos (collectively the Marks) of the University's alumni association and athletic group in connection with marketing credit cards to the alumni, athletics fans, employees, faculty members, and students of the University for a period of ten years. The University has agreed to provide the Bank with a list of all of the individuals noted above, guaranteeing a minimum of 200,000 names. The University has agreed to provide an updated list to the Bank at least two times per year. The University already updates this list on a regular basis. The University has approval rights over all marketing materials to be used by the Bank to market the credit card program; however, the University's approval may not unreasonably be withheld. In connection with the agreement, the Bank has agreed to pay to the University royalties based on the number of accounts obtained as well as a percentage of the net retail sales posted to the account. The University will earn $1 per new account at inception and on each anniversary, provided the card is renewed. The University will earn between .04 percent and .05 percent of net retail sales, which excludes refunds, financing charges, and cash advances. The agreement provides for a one-time payment in the amount of $10,000,000 (the Guaranteed Advance) which will be offset against future royalties earned by the University. The Guaranteed Advance is payable at the inception of the agreement, once the University executes the agreement, authorizes the use of the University's Marks, and provides access to a list of at least 200,000 names. The University has fulfilled the initial requirements and has received the one-time payment of $10,000,000. The Guaranteed Advance is not refundable to the Bank provided that the University fulfills all its obligations, approves the marketing materials, and continues to provide the updated list of names to the Bank in accordance with the agreement. The agreement is silent as to the consequences if the University defaults on its obligations. If the agreement is terminated due to an uncured material breach by the Bank, the University is not required to remit any unearned portion of the Guaranteed Advance to the Bank. The agreement is for a term of 10 years. At the end of the fifth year, the University has the right to terminate the agreement. If the University elects to terminate the agreement at the end of the fifth year, the University must repay $4 million of the Guaranteed Advance. Based on a success rate of 1-2 percent, the average annual card usage would have to be in the range of $50,000 to $100,000 before the University received any additional royalties. The University does not anticipate that it will ever receive any additional royalties. The University understands that industry accounting practices on this issue is mixed. Required How should the University recognize the revenue from the agreement? Instructions: Using FASB Accounting Standards Codification Professional View (https://asc.fasb.org), search professional literature relevant to this issue, and come up with your solutions to this case. Please note that, in answering this question, you need to cite the relevant literature to support your position. Your answers should be limited to no more than 2 pages. Revenue's Up Dude! The University of Maui (the "University'), a private institution, has the best college- level surfing team in the country and has enjoyed fame and notoriety from the team's success. The Luau Bank (the Bank), the largest bank in the state, approached the University with an offer to enter into an agreement for affinity bankcards. The bankcards would feature the logo of the University on the card. The University has accepted the agreement. The agreement provides the Bank with the exclusive right to use the names, trademarks, copyrights and logos (collectively the Marks) of the University's alumni association and athletic group in connection with marketing credit cards to the alumni, athletics fans, employees, faculty members, and students of the University for a period of ten years. The University has agreed to provide the Bank with a list of all of the individuals noted above, guaranteeing a minimum of 200,000 names. The University has agreed to provide an updated list to the Bank at least two times per year. The University already updates this list on a regular basis. The University has approval rights over all marketing materials to be used by the Bank to market the credit card program; however, the University's approval may not unreasonably be withheld. In connection with the agreement, the Bank has agreed to pay to the University royalties based on the number of accounts obtained as well as a percentage of the net retail sales posted to the account. The University will earn $1 per new account at inception and on each anniversary, provided the card is renewed. The University will earn between .04 percent and .05 percent of net retail sales, which excludes refunds, financing charges, and cash advances. The agreement provides for a one-time payment in the amount of $10,000,000 (the Guaranteed Advance) which will be offset against future royalties earned by the University. The Guaranteed Advance is payable at the inception of the agreement, once the University executes the agreement, authorizes the use of the University's Marks, and provides access to a list of at least 200,000 names. The University has fulfilled the initial requirements and has received the one-time payment of $10,000,000. The Guaranteed Advance is not refundable to the Bank provided that the University fulfills all its obligations, approves the marketing materials, and continues to provide the updated list of names to the Bank in accordance with the agreement. The agreement is silent as to the consequences if the University defaults on its obligations. If the agreement is terminated due to an uncured material breach by the Bank, the University is not required to remit any unearned portion of the Guaranteed Advance to the Bank. The agreement is for a term of 10 years. At the end of the fifth year, the University has the right to terminate the agreement. If the University elects to terminate the agreement at the end of the fifth year, the University must repay $4 million of the Guaranteed Advance. Based on a success rate of 1-2 percent, the average annual card usage would have to be in the range of $50,000 to $100,000 before the University received any additional royalties. The University does not anticipate that it will ever receive any additional royalties. The University understands that industry accounting practices on this issue is mixed. Required How should the University recognize the revenue from the agreement? Instructions: Using FASB Accounting Standards Codification Professional View (https://asc.fasb.org), search professional literature relevant to this issue, and come up with your solutions to this case. Please note that, in answering this question, you need to cite the relevant literature to support your position. Your answers should be limited to no more than 2 pages