question archive ZF has a points program to build customer loyalty
Subject:AccountingPrice: Bought3
ZF has a points program to build customer loyalty. This began in 2019. The customer gets one loyalty point for every $ 10 purchased. Each point is redeemable for $ 1 discount on future purchases of ZF products. The Company expects a 25% redemption rate from 2019 sales. Using ASPE ZF has correctly accounted for the cost of the points plan by accruing the cost of goods to be redeemed as a liability with an offsetting expense. This has been estimated to be $ 45,000 using their current gross margin of 60%.
In 2019 financials is an expense for $ 45,000 and a liability for $ 45,000 for the points program.
compare accounting underIFRS an ASPE