Customer loyalty program – allocation of the consideration
Entity E operates a restaurant chain. If a guest consumes dishes and/or beverages worth at least CU 10, he is granted a coupon that entitles him to consume a free piece of Sacher torte (fair value = CU 1).
On Dec, 29, 01, Mr X consumes dishes and beverages worth CU 19. Thus, he is granted a coupon. He redeems the coupon on Jan 10, 02.
Required
Prepare any necessary entries in E”s financial statements as at Dec 31, 01. E applies (a) the residual value method and (b) the relative fair value method in order to allocate the consideration between the main transaction and the coupon.