Professional Documents
Culture Documents
Customer Loyalty Programmes
Customer Loyalty Programmes
IFRIC Interpretations 13
Background
1. Customer loyalty programmes are used by entities to provide customers
with incentives to buy their goods and services.
2. If customer buys goods or services, the entity grants the customer award
credits (often described as points).
3. The customer can redeem the award credits for awards such as free or
discounted goods or services.
4. If the entity supplies the awards itself, it shall recognize the consideration
allocated to award to credits as revenue when award credits are
redeemed and it fulfills its obligation to supply awards. The amount of
revenue recognized shall be based on the number of award credits that
have been redeemed in exchange for awards, relative to the total number
expected to be redeemed.
5. If a third party supplies the awards, the entity shall assess whether it is
collecting the consideration allocated to the award credits on its own
account (i.e. as the principal in the transaction) or on behalf of the third
party (i.e. as an agent for the third party)
a. If the entity is collecting the consideration on behalf of the third
party, it shall:
An entity shall apply this Interpretation for annual periods beginning on or after
July 1, 2008.
Pro-forma entries
Sale of goods or Cash
services
Sale/Service Income
Deferred Revenue from Loyalty Award
xxx
xxx
xxx
Recognition of
revenue from
loyalty awards
xxx
If a third party
supplies the
awards,
payment to the
third party
for the points
xxx
If the entity is
collecting the
consideration
on behalf of the
third party
xxx
July 2009
xxx
xxx
xxx
xxx