Question
Q5: Loyalty program A franchise of automotive technicians has a contract arrangement for a rewards program with a car manufacturing company called BMC. For every
Q5: Loyalty program A franchise of automotive technicians has a contract arrangement for a rewards program with a car manufacturing company called BMC. For every $5.00 of services performed by an
automotive technician at anyone of the franchise locations, the customer is awarded Car Dollars. The Car Dollars can be redeemed towards the purchase of a motor vehicle manufactured by BMC. In total the automotive technicians performed $26,300,000 worth of services in 2020. BMC have estimated the stand-alone selling price of $0.45 for each Car Dollar awarded, the automotive technicians will pay $0.40 to the BMC for each Car Dollar awarded to its customers.
Required
a. Determine how the $26,300,000 transaction price would be allocated to the two performance obligations (the automotive services and the Car Dollars earned by the customers).
b. Determine the amount of the commission revenue to be reported by the franchises in 2020
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