Question
Sandhill Inc. has a customer loyalty program that rewards a customer with 1 customer loyalty point for every $10 of purchases. Each point is redeemable
Sandhill 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, 2020, customers purchase products for $370,000 (with a cost of $210,900) and earn 37,000 points redeemable for future purchases. Sandhill expects 31,500 points to be redeemed. Sandhill estimates a standalone selling price of $2.50 per point (or $92,500 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, Sandhill concludes that the points are a separate performance obligation.
(a) Determine the transaction price for the product and the customer loyalty points. Product Purchases $ Loyalty Points $ Total Transaction Price $
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