For each of the following two topics, describe the accounting under AASB 15 Revenue from Contracts with Customers.
(1) Flight Transportation (for tickets used and for ticket/credit “breakage”)
(2) Loyalty Program (Hint: Loyalty program includes flight and flight points. Are there two performance obligations or just one performance obligation?)
Hint: Focus on the following questions when applying the five-step model.

- What is the performance obligation?

• - How to allocate the transaction price if multiple performance obligations are involved? (General discussion. Do not try to quantify the amounts)

• - When would the performance obligation be satisfied and therefore revenue can be recognized?

• - What is the appropriate accounting process if performance obligation has not been satisfied by a reporting date?

  2. Where are the areas for discretion and judgment (and opportunities for earnings management)?

  3. Please discuss the implication of accounting change in revenue recognition to managers. (General discussion, not limited to the context of the case.)

Answer rating: 100% (QA)

1 For flight transportation the performance obligation is the transportation service ... View the full answer