Crystal Company operates a customer loyalty programme. It grants programme members 10 loyalty points for every P1,000 amount of groceries. Programme members can redeem the points for further groceries. The points have no expiry period. Crystal has granted 20,000 points and management expects 80% of these points to be redeemed. Crystal estimates the fair value of each loyalty point to be P5 and the amount of deferred revenue initially is P100,000. At the end of the current year December 31, 2020 8,000 points have been redeemed in exchange for groceries. What amount of revenue from the loyalty programme should be recognized on December 31, 2020?

Crystal Company operates a customer loyalty programme. It grants programme members 10 loyalty points for every P1,000 amount of groceries. Programme members can redeem the points for further groceries. The points have no expiry period. Crystal has granted 20,000 points and management expects 80% of these points to be redeemed. Crystal estimates the fair value of each loyalty point to be P5 and the amount of deferred revenue initially is P100,000. At the end of the current year December 31, 2020 8,000 points have been redeemed in exchange for groceries. What amount of revenue from the loyalty programme should be recognized on December 31, 2020?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 10P

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