Please answer 2.5, all the information is provided

0. Une Michael Jones has just joined the accounting policy team at Presto Hospitality (Presto), a public company in the business of operating food and beverage concessions. Presto is in the process of executing a contract related to the following proposed transaction: 2. Den 3. The 4. Se 5. Anar 6. Oro Presto has negotiated a 10-year concessions agreement with a major league baseball stadium owner (Stadium Co.). The agreement would give Presto the right and obligation to operate all of the stadium's fixed concession stands and portable food and beverage carts, to provide food and beverage service to premium seating areas (including suites), and to have hawkers selling concessions in the aisles of the stadium (Sodas! Peanuts!), collectively, the Food and Beverage Facilities." The locations of fixed concession stands within the stadium are designated in architectural drawings included within the draft concessions agreement. The draft contract states that Stadium Co., at its option and at its cost (such as the cost to rebuild leasehold improvements) can require Presto to move its locations within the stadium. The concessions agreement will require Presto to remit 50% of its gross food sales and 52% of its gross alcohol sales to Stadium Co. in exchange for the right to operate at the stadium. Presto will also be required to make an upfront payment of $5 million to Stadium Co., which will be used toward capital improvements, build-outs, and branding of the con- cession facilities. Throughout the operating period of this agreement, Stadium Co. will have the right to approve all of Presto's proposed menu items, pricing, and choices suppliers and Stadium Co. has indicated in negotiations that it plans to actively exercise this approval cessful bid and was selected from a group of competing potential concessionaires Continued This che that rese in the p (within authority. To be chosen as the concession provider for this stadium, Presto submitted a suc- issues thought In a biases! uns guidance! In addition to researching the guidance, stop and think: Does this guidance intuitively for this situation? St Haspitality-Identified Asset Question Recall from the case facts in the Presto Hospitality example that the concessions agreement includes architectural drawings noting the location of fixed concession stands within the stadium. Research whether the fixed concession stands would still be considered identified assets if the contract did not include these drawings. For example, assume the contract states: "Concession Provider has the right to operate concession stands and portable carts within the Stadium (the "Food and Beverage Facilities') as well as the right to have hawkers selling food and beverage and the right to serve food and beverages in suites and club seating areas. Use excerpts from the Codification to evaluate and conclude upon whether the concession stand locations would still be considered identified assets. As necessary, identify additional questions you might ask-or facts you might gather-in order to fully research this question Presto Hospitality-Lease Scope Research Research this question: Is Presto entitled to substantially all economic benefits from use of the identified assets? What is the significance of this question (in other words, what happens if the answer to this question is yes? What if the answer is no?). You may need to review the sample memo at the end of Chapter 3 for additional guidance on Presto's identified assets. In researching this question, in addition to the facts presented previously, consider also that Stadium Co. can require Presto to source supplies from sponsors of the stadium (Stadium Co.'s "official sponsors"). As necessary, identify additional questions you might ask-or facts you might gather-in order to fully research this question. 2.5 0. Une Michael Jones has just joined the accounting policy team at Presto Hospitality (Presto), a public company in the business of operating food and beverage concessions. Presto is in the process of executing a contract related to the following proposed transaction: 2. Den 3. The 4. Se 5. Anar 6. Oro Presto has negotiated a 10-year concessions agreement with a major league baseball stadium owner (Stadium Co.). The agreement would give Presto the right and obligation to operate all of the stadium's fixed concession stands and portable food and beverage carts, to provide food and beverage service to premium seating areas (including suites), and to have hawkers selling concessions in the aisles of the stadium (Sodas! Peanuts!), collectively, the Food and Beverage Facilities." The locations of fixed concession stands within the stadium are designated in architectural drawings included within the draft concessions agreement. The draft contract states that Stadium Co., at its option and at its cost (such as the cost to rebuild leasehold improvements) can require Presto to move its locations within the stadium. The concessions agreement will require Presto to remit 50% of its gross food sales and 52% of its gross alcohol sales to Stadium Co. in exchange for the right to operate at the stadium. Presto will also be required to make an upfront payment of $5 million to Stadium Co., which will be used toward capital improvements, build-outs, and branding of the con- cession facilities. Throughout the operating period of this agreement, Stadium Co. will have the right to approve all of Presto's proposed menu items, pricing, and choices suppliers and Stadium Co. has indicated in negotiations that it plans to actively exercise this approval cessful bid and was selected from a group of competing potential concessionaires Continued This che that rese in the p (within authority. To be chosen as the concession provider for this stadium, Presto submitted a suc- issues thought In a biases! uns guidance! In addition to researching the guidance, stop and think: Does this guidance intuitively for this situation? St Haspitality-Identified Asset Question Recall from the case facts in the Presto Hospitality example that the concessions agreement includes architectural drawings noting the location of fixed concession stands within the stadium. Research whether the fixed concession stands would still be considered identified assets if the contract did not include these drawings. For example, assume the contract states: "Concession Provider has the right to operate concession stands and portable carts within the Stadium (the "Food and Beverage Facilities') as well as the right to have hawkers selling food and beverage and the right to serve food and beverages in suites and club seating areas. Use excerpts from the Codification to evaluate and conclude upon whether the concession stand locations would still be considered identified assets. As necessary, identify additional questions you might ask-or facts you might gather-in order to fully research this question Presto Hospitality-Lease Scope Research Research this question: Is Presto entitled to substantially all economic benefits from use of the identified assets? What is the significance of this question (in other words, what happens if the answer to this question is yes? What if the answer is no?). You may need to review the sample memo at the end of Chapter 3 for additional guidance on Presto's identified assets. In researching this question, in addition to the facts presented previously, consider also that Stadium Co. can require Presto to source supplies from sponsors of the stadium (Stadium Co.'s "official sponsors"). As necessary, identify additional questions you might ask-or facts you might gather-in order to fully research this question. 2.5