Carla Vista 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, 2025, customers purchase products for $390,000 (with a cost of $210,600) and earn 39,000 points redeemable for future purchases. Carla Vista expects 34,300 points to be redeemed. Carla Vista estimates a standalone selling price of $2.50 per point (or $97,500 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, Carla Vista concludes that the points are a separate performance obligation. (a) Your answer is incorrect. Determine the transaction price for the product and the customer loyalty points. Product purchases Loyalty points Total transaction price $ $ $

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Subject - account 

Please help me. 

Thankyou. 

Carla Vista 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, 2025, customers purchase
products for $390,000 (with a cost of $210,600) and earn 39,000 points redeemable for future purchases. Carla Vista
expects 34,300 points to be redeemed. Carla Vista estimates a standalone selling price of $2.50 per point (or $97,500
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, Carla Vista concludes that the points are a separate performance
obligation.
(a)
Your answer is incorrect.
Determine the transaction price for the product and the customer loyalty points.
Product purchases
Loyalty points
Total transaction price
Transcribed Image Text:Carla Vista 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, 2025, customers purchase products for $390,000 (with a cost of $210,600) and earn 39,000 points redeemable for future purchases. Carla Vista expects 34,300 points to be redeemed. Carla Vista estimates a standalone selling price of $2.50 per point (or $97,500 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, Carla Vista concludes that the points are a separate performance obligation. (a) Your answer is incorrect. Determine the transaction price for the product and the customer loyalty points. Product purchases Loyalty points Total transaction price
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Knowledge Booster
Revenue Recognition
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education