Revenue – ifrs 15 handbook

Example 3 – Allocating a discount: Transaction involving a 
customer loyalty programme
IFRS 15.82–85
Retailer R has a customer loyalty programme that rewards a customer with 
one customer loyalty point for every 10 purchases of products. Each point is 
redeemable for a 1 discount on any future purchases of R’s products. During a 
reporting period, Customer C purchases products and gift cards for 1,200 and 
earns 100 points that are redeemable on future purchases. The consideration is 
fixed and the stand-alone selling price of the purchased products is 1,200 (1,000 
for products and 200 for gift cards). R expects 95 points to be redeemed. R 
estimates a stand-alone selling price of 0.95 per point (totalling 95) on the basis 
of the likelihood of redemption.
The loyalty points provide a material right to C that it would not receive without 
entering into the contract. Therefore, R concludes that the promise to provide 
the loyalty points is a performance obligation.
The sum of the stand-alone prices of 1,295 (1,000 in products, 200 in gift 
cards and 95 in loyalty points) exceeds the promised consideration of 1,200. R 
needs to determine whether to allocate the discount to all or only some of the 
performance obligations.
R regularly sells both the gift cards and the products with loyalty points on a 
stand-alone basis. The amounts paid for the gift cards are equal to the stand-
alone selling price. R also regularly sells, on a stand-alone basis, the products 
and loyalty points in a bundle at substantially the same discount as under the 
contract being evaluated. As a result, R has evidence that the entire discount 
should be allocated to the promise to transfer the products and loyalty points, 
and not the gift cards.

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4 Step 4 – Allocate the transaction price to the performance obligations in the contract | 103
4.2 Allocate the transaction price
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As a result, R determines that the discount relates entirely to the products and 
loyalty points. R allocates the transaction price to the products, gift cards and 
loyalty points as follows.