ABC Department store grants loyalty awards to its customers wherein for every P 100 purchase made, the customer receives 5 points equivalent to P 5. The points accumulated by the customer may be used as part or full payment for merchandise purchases in the future. During 2018, total sales amounted to P 10,000,000. Fair values of the merchandise sold and reward points are P 9,500,000 and P 500,000, respectively. At the end 2018, 60% out of 90% have been redeemed by the customers. At the end 2019, an additional 20% have been redeemed and the revised estimate of total points expected to be redeemed was now at 95%. In accordance with IFRS 15, how much is the balance of the liability for customer loyalty awards as of December 31,2018?

ABC Department store grants loyalty awards to its customers wherein for every P 100 purchase made, the customer receives 5 points equivalent to P 5. The points accumulated by the customer may be used as part or full payment for merchandise purchases in the future. During 2018, total sales amounted to P 10,000,000. Fair values of the merchandise sold and reward points are P 9,500,000 and P 500,000, respectively. At the end 2018, 60% out of 90% have been redeemed by the customers. At the end 2019, an additional 20% have been redeemed and the revised estimate of total points expected to be redeemed was now at 95%. In accordance with IFRS 15, how much is the balance of the liability for customer loyalty awards as of December 31,2018?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 10EB: Starlight Enterprises has net credit sales for 2019 in the amount of $2,600,325, beginning accounts...

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