The following information comes from the 2006 financial statements of McDonald’s Corporation. Individual franchise arrangements generally include a lease and a license and provide for payment of initial fees, as well as continuing rent and service fees to the Company based upon a percent of sales with minimum rent payments that parallel the Company’s underlying leases and escalations (on properties that are leased). McDonald’s franchisees are granted the right to operate a restaurant using the McDonald’s System and, in most cases, the use of a restaurant facility, generally for a period of 20 years. Franchisees pay related occupancy costs including property taxes, insurance, and maintenance. In addition, in certain markets outside the United States, franchisees pay a refundable, noninterest-bearing security deposit. Foreign affiliates and developmental licensees pay a royalty to the Company based upon a percent of sales. The results of operations of restaurant businesses purchased and sold in transactions with franchisees, affiliates, and others were not material to the consolidated financial statements for periods prior to purchase and sale. Revenues from franchised and affiliated restaurants consisted of:

.:.

Future minimum rent payments due to the Company under existing franchise arrangements are:

.:.

This $21.4 billion amount represents the future minimum payments that McDonald’s expected to receive from its franchisees as of December 31, 2006.

1. Using the element definition from the conceptual framework, should this $21.4 billion be recorded as an asset in McDonald’s 2006 balance sheet? Why or why not?

2. If your answer in part (1) is yes, what measurement attribute should be used in reporting the asset?

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(In millions) Rents and service fees Initial fees 2006 2005 2004 $4,802.7 36.1 $5,452.2 $5,452.2 51.5 515 $5,067.9 38.0 $5.105.9 Revenues from franchised and affillated restaurants $4,838.8 $5,503.7