Issues referred to you by the CFO of Raven Ltd (Raven):

1. The marketing department has proposed a marketing campaign whereby customers receive a coupon for a $10 discount on subsequent purchases of the same product. (In other words, the customer might pay $25 for a product and receive a $10 discount coupon toward the purchase of the same product at a later time.) If the campaign is launched November 1 the CFO estimates that 350,000 items with coupons attached will be sold by December 31, 2021. Raven doesnt have experience with this type of marketing program but consultants say that it should expect a 50% to 70% redemption rate. The CFO is concerned about how the financial statements will be affected if the program is implemented in 2021.

Required: This company has adopted IFRS and is being audited this year for the first time. How to account for these issues as well as your thoughts on what, if anything should be done by the end of the year for there to be a desirable accounting outcome regarding them. The CFO said that it was very important for Raven to show immediate improvement in performance in terms of net income and the debt-to-equity ratio.