William Company operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date. During
Topic: Premium Liability
Problem 2-20
William Company operates a customer loyalty program. The entity grants loyalty points for goods purchased.
The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date.
During 2020, the entity issued 100,000 award credits and expects that 80% of these award credits shall be redeemed. The total stand-alone selling price of the award credits granted is reliably measured at P2,000,000.
In 2020, the entity sold goods to customers for a total consideration of P8,000,000 based on stand-alone selling price.
The award credits redeemed and the total award credits expected to be redeemed each year are as follows
|
Redeemed |
Expected to be redeemed |
|
|
2020 |
30,000 |
80% |
|
2021 |
15,000 |
90% |
Solve for the following:
- The revenue from points for 2020
- The revenue from points for 2021
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