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. 

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

Answer rating: 100% (QA)

Yes its a Service Concession Arrangement The Accounting Framework for this contract is IFRIC of sect... View the full answer