Three independent situations follow.

Situation 1: Marquart Stamp Corporation records stamp service revenue and provides for the cost of redemptions in the year stamps are sold to licensees. The stamps can be collected and then redeemed for discounts on future purchases from Marquart as an incentive for repeat business. Marquart's past experience indicates that only 80% of the stamps sold to licensees will be redeemed. Marquart's liability for stamp redemptions was $13 million at December 31, 2016. The cost of redemptions for stamps sold prior to January 1, 2017 was $6 million. If all the stamps sold in 2017 were presented for redemption in 2018, the redemption cost would be $5.2 million. 

Instructions
What amount should Marquart report as a liability for stamp redemptions at December 31, 2017?

Situation 2: In packages of its products, ITSS Inc. includes coupons that may be presented at retail stores to obtain discounts on other ITSS products. Retailers are reimbursed for the face amount of coupons redeemed plus 10% of that amount for handling costs. ITSS honours requests for coupon redemption by retailers up to three months after the consumer expiration date printed on the coupon. ITSS estimates that 60% of all coupons issued will eventually be redeemned. Information relating to coupons issued by ITSS during 2017 (the first year of the promotion) is as follows:

Instructions
(a) What amount should ITSS report as a liability for unredeemed coupons at December 31, 2017?
(b) What amount of premium expense should ITSS report on its 2017 income statement?

Situation 3: Baylor Corp. sold 700,000 boxes of pie mix under a new sales promotion program. Each box contains one coupon that entitles the customer to a baking pan when the coupon is submitted with an additional $4.75 from the customer. Baylor pays $5.00 per pan and $1.25 for shipping and handling. Baylor estimates that 60% of the coupons will be redeemed even though only 105,000 coupons had been processed during 2017. Each box of pie mix is sold for $4.50, and Baylor estimates that $1.00 of the sale price relates to the baking pan to be awarded. Baylor follows IFRS and accounts for its promotional programs in accordance with the revenue approach and IFRIC 13.

Instructions
(a) What amount related to the promotional program should Baylor report as a liability at December 31, 2017?
(b) What amount of premium expense will Baylor report on its 2017 income statement as a result of the promotional
program?
(c) Prepare any necessary 2017 journal entries to record revenue, the liability, and coupon redemptions.
(d) Discuss the conceptual merit of recording the sales revenue related to unredeemed coupons as unearned revenue.