Premium and warranty liability - Premium and warranty...

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Premium and warranty liability James Company, a grocery retailer, operates a customer loyalty program. The entity grants program members loyalty points when they spend a specified amount on groceries. Program members can redeem the points for further groceries. Program members can redeem the points for further groceries. The points have no expiry date. During 2011, the entity granted 10,000 points. Management expects that 8,000 of these points will be redeemed. The fair value of each loyalty point is estimated at 100 php. The sales during 2011 amounted P 8,000,000 including the loyalty points. On December 31, 2011, 4,000 points have been redeemed in exchanged for groceries. In 2012, the management revised its expectations and now expects 9,000 points to be redeemed altogether. During 2012, the entity redeemed 4,100 points. What is the revenue earned from loyalty points for the year ended December 31, 2012? a. 100,000 b. 400,000 c. 500,000 d. 80,000 Jeanne Company, a retailer of electrical goods, participates in a customer loyalty program operated by an airline. The entity grants program members one air travel point for every P1,000 spent on electrical good. Program members can redeem the points for travel with the airline subject to availability. Jeane Company pays the airline P 90 for each point. During 2011, Jeane Company sold electric goods for consideration totalling P 5,000,000 and granted 5,000 points. The fair Value of a point is P 100. If Jeane Company has collected the consideration allocated to the points on its own account, what is the revenue to be recognized in 2011 in relation to the points? a. 500,000 b. 450,000 c. 50,000 d. 0 Beginning 2011, daisy Company Began Marketing a new beer called “ serbes”. To help Promote the product the product, the management is offering a special Serbesa beer mug to each customer for every 20 specially marked bottle caps of serbesa. Daisy estimates that out of the 300,000 bottles of serbesa sold during 2011, only 50% of the marked bottle cps will be redeemed. During 2011, the entity purchased 8,000 beer mugs at a total cost of P 360,000 or P45 each. During the year, the entity already distributed 4, 500 mugs to each customers. What is the premium liability
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Premium and warranty liability - Premium and warranty...

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