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Orange Airline has a frequent flyer program that rewards customers with frequent flyer miles based on amounts paid for flights. A customer purchases a ticket for $400 and also earns 2,000 miles based on the price of the ticket.

Orange Airline has a frequent flyer program that rewards customers with frequent flyer miles based on amounts paid for flights. A customer purchases a ticket for $400 and also earns 2,000 miles based on the price of the ticket.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Orange Airline has a frequent flyer program that rewards customers with frequent flyer miles based on amounts paid for flights. A customer purchases a ticket for $400 and also earns 2,000 miles based on the price of the ticket. Miles are redeemable at a rate of 20 miles for $1 ($0.05 per mile). The miles may only be redeemed for flights with Orange Airline. Your answers should be whole numbers (no decimal points, no $). What amount of revenue is recognized when the flight occurs? What amount should be allocated to deferred revenue related to the miles?
Transcribed Image Text:Orange Airline has a frequent flyer program that rewards customers with frequent flyer miles based on amounts paid for flights. A customer purchases a ticket for $400 and also earns 2,000 miles based on the price of the ticket. Miles are redeemable at a rate of 20 miles for $1 ($0.05 per mile). The miles may only be redeemed for flights with Orange Airline. Your answers should be whole numbers (no decimal points, no $). What amount of revenue is recognized when the flight occurs? What amount should be allocated to deferred revenue related to the miles?
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