Question: 1. During the year, CF launched a new loyalty program called the Movie Points Program (MPP). Individuals can sign up for a loyalty card and

1. During the year, CF launched a new loyalty program called the Movie Points Program (MPP). Individuals can sign up for a loyalty card and earn 1 MP for every movie ticket purchased. Seven MPs are required for a free movie.

The program has been a big success, and 345,548 MPs were issued during 2020, with 25,152 free movies being awarded. Management expects that 14% of the points will never be redeemed (that is, 1 of 7 points).

No journal entries have been recorded in the financial statements related to the MPP. On average, a movie ticket has a retail value of $10 and a total cost of $3.

Instruction: Record the year-end journal entry to recognize the loyalty program under both the revenue and the expense approach and explain the difference in two approaches.

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