Erika Company operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date. During 2020, the entity issued 50,000 award credits and expects that 80% of these award credits shall be redeemed. The stand-alone selling price of the award credits granted is reliably measured at P1,000,000. In 2020, the entity sold goods to customers for a total consideration of P7,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows: Redeemed Expected to be Redeemed 2020 15,000 80%
Erika Company operates a customer loyalty program. The entity grants loyalty points for goods purchased.
The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date.
During 2020, the entity issued 50,000 award credits and expects that 80% of these award credits shall be redeemed.
The stand-alone selling price of the award credits granted is reliably measured at P1,000,000.
In 2020, the entity sold goods to customers for a total consideration of P7,000,000 based on stand-alone selling price.
The award credits redeemed and the total award credits expected to be redeemed each year are as follows:
Redeemed Expected to be Redeemed
2020 15,000 80%
2021 7,950 85%
2022 2,550 85%
2023 15,000 90%
Required:
1. Provide a step-by-step computation on the preparation of
Step by step
Solved in 2 steps with 1 images
