Question
James company operates a customer loyalty program. The entity grants program members loyalty points when they spend a specified amount on purchases. Program members can
James company operates a customer loyalty program. The entity grants program members loyalty points when they spend a specified amount on purchases.
Program members can redeem the points for further purchases. The points have no expiry date.
During 2019, the customer earned 60,000 points. Management expects that 100% of these points will be redeemed. The stand-alone selling price of each loyalty point is estimated at P20.
The sales during 2019 amounted to P6,8000,000 based on stand-alone selling price.
On December 31,2019, 28,000 points have been redeemed in exchange for purchases.
In 2020, the management revised expectations and now expects 90% of the points to be redeemed.
In 2020, the entity redeemed 9,000 points.
1) What amount of the transaction price should be allocated to the points? 2) What is the revenue earned from loyalty points for 2019? 3) What is the revenue earned from loyalty points for 2020?
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