To increase sales, Letourneau Inc., a public company following IFRS, implemented a customer loyalty program that rewards a customer with one loyalty point for every $30 of merchandise purchased. Each point is redeemable for a $2.50 discount on any purchases of Letourneau merchandise in the next three years. After the program launched, during 2020, customers bought merchandise for $300,000 (all products are sold to provide a 35% gross profit) and earned 10,000 points redeemable for future purchases. The stand-alone selling price of the merchandise sold is $300,000. Based on prior experience with incentive programs like this, Letourneau expects 7,500 points to be redeemed related to these sales.

Instructions

a. Identify the separate performance obligation in the Letourneau bonus point program, and briefly explain the point in time when the performance obligations are satisfied. Round percentage allocations to two decimal places and final amounts to the nearest dollar.

b. Prepare the journal entries for cash sales including the issuance of loyalty points for Letourneau in 2020.

c. Would the accounting of the customer loyalty program be different if Letourneau had been following ASPE?