Question 1210719: Sandhill Inc. has a customer loyalty program that rewards a customer with one customer loyalty point for every $100 of purchases. Each point is redeemable for a $3.00 discount on any future purchases. On July 2, 2027, customers purchase products for $348,000 cash (with a cost of $198,360) and earn 3,480 points redeemable for future purchases. Sandhill expects 2,900 points to be redeemed (based on its past experience, which is predictive of the amount of consideration to which it will be entitled). Sandhill estimates a stand-alone selling price of $3.00 per point (or $8,700 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, Sandhill concludes that the points are a separate performance obligation.
At the end of the first reporting period (july 31 2027) 1000 loyality points are reedemed. Sadhill continues to expect 2900 loyalty points to be redeemed in total.
Determine the amount of loyalty point revenue to be recognized at July 31, 2027.
Answer by ikleyn(54062)   (Show Source):
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