To increase sales, Bélanger Inc., a public company following IFRS, implemented a customer loyalty program that rewards a customer with 1 loyalty point for every $10 of purchases on a select group of products. Each point is redeemable for a $1 discount on any purchases of Bélanger merchandise in the next two years. Following the implementation of the program, during 2017, customers purchased select group products for $100,000 and earned 10,000 points redeemable for future purchases. (All products are sold to provide a 45% gross profit.) The stand-alone selling price of the purchased products is $100,000. Based on prior experience with incentive programs like this, Bélanger expects 9,500 points to be redeemed related to these sales. (Bélanger appropriately uses this experience to estimate the value of future consideration related to bonus points.)
Instructions
(a) Identify the separate performance obligation in the Bélanger bonus point programs, and briefly explain when the performance obligations are satisfied.
(b) Prepare the journal entries for cash sales including the issuance of bonus points for Bélanger in 2017.
(c) Would the accounting of the customer loyalty program be different if Bélanger had been following ASPE?