Question
Brewhouse Coffee Co. issues loyalty points with its sales. Allocate the transaction price, defer the points as a contract liability, and release it as points are redeemed — including a change in the redemption estimate.
Statements in this challenge
- Allocation to PointsNumeric Answer
- Journal EntriesJournal Entry
- 2026 Points RevenueNumeric Answer
- Closing Contract LiabilityNumeric Answer
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IFRS 15 — Revenue from Contracts with Customers
Apply the five steps in order: identify the contract, identify the performance obligations, determine the transaction price, allocate it to the obligations, and recognise revenue as each is satisfied. Most errors come from skipping straight to the amount without first separating the obligations.
Common mistakes
- Recognising the full contract price on delivery when a distinct service obligation is still outstanding.
- Allocating the transaction price other than on relative stand-alone selling prices.
- Recognising revenue when cash is received rather than when control transfers.
Further readingIFRS 15: the five-step model