A television satellite operator launches a loyalty program by which points are granted for using satellite services. The pointsentitle the customer to a discount on the price to upgrade the satellite receiver or other equipment such as a digital box.Customers who accumulate 1,036 points will receive $259 off the purchase price of any equipment. (In other words, one point hasa $0.25 value.) During the first year of the program, customers had accumulated 1,554,000 points on total revenue of $7,536,900.The operator expects that 60% of the points granted will be redeemed. Of the points granted in the first year, 518,000 wereredeemed. How would the loyalty program be reflected in the first two years of launch? (Do not round other intermediatecalculations. Round percentage of total selling price calculations to 1 decimal place, e.g. 15.2% and final answers to 0 decimal places, e.g.125.)RevenueLiability related to loyalty points$7536900

As per IFRS, when a business entity issue loyalty points to its customers, which can be used for…

1,554,000 points on total revenue of $7,536,900. Operator expects that 60% of the points granted will be redeemed. Of the points granted in the first year, 518,000 were redeemed. How would the loyalty program be reflected in the first two years of launch? (Do not round other intermediate calculations. Round percentage of total selling price calculations to 1 decimal place, e.g. 15.2% and final answers to 0 decimal places, e.g. 125.) Revenue Liability related to loyalty points $ 7536900

1,554,000 points on total revenue of $7,536,900. Operator expects that 60% of the points granted will be redeemed. Of the points granted in the first year, 518,000 were redeemed. How would the loyalty program be reflected in the first two years of launch? (Do not round other intermediate calculations. Round percentage of total selling price calculations to 1 decimal place, e.g. 15.2% and final answers to 0 decimal places, e.g. 125.) Revenue Liability related to loyalty points $ 7536900

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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(Customer Loyalty Program) Martz Inc. has a customer loyalty program that rewards a customer with 1 customer loyalty point for every $10 of purchases. Each point is redeemable for a $3 discount on any future purchases. On July 2, 2017, customers purchase products for $300,000 (with a cost of $171,000) and earn 30,000 points redeemable for future purchases. Martz expects 25,000 points to be redeemed. Martz estimates a standalone selling price of $2.50 per point (or $75,000 total) on the basis of the likelihood of redemption. The points provide a material right to customers that they would not receive without entering into a contract. As a result, Martz concludes that the points are a separate performance obligation.Instructions(a) Determine the transaction price for the product and the customer loyalty points.(b) Prepare the journal entries to record the sale of the product and related points on July 2, 2017.(c) At the end of the first reporting period (July 31, 2017), 10,000 loyalty…
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Brandin Grocers gives one loyalty point to its customers for every dollar spent in the store. The loyalty points will not expire. Customers can redeem these points and are eligible to receive a box of cookies if they redeem 100 points. Brandin Grocers purchase these cookie boxes from the baker @ $3 a box. Because the offer is so popular, 98 per cent of the customers redeem their loyalty points to get the box of cookies.In the month of December 20x1, the total sales recorded in the Store were $ 442,000. You are required to calculate the liability amount and provide the necessary entries.
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