Revenue – ifrs 15 handbook

Example 12A – Third party customer loyalty programme (1)
Company L participates in a customer loyalty programme operated by a third 
party. Under the programme, members earn points for purchases made in L’s 
stores. Programme members redeem the accumulated award points for goods 
supplied by the third party. At the end of 2018, L has granted points with an 
allocated transaction price of 1,000 and owes the third party 700. The amount of 
revenue to be recognised depends on whether L acts as an agent or a principal 
with respect to the points.
L is an agent
If L is acting as an agent with respect to the points, then it recognises revenue 
of 300 in relation to the award points when its products are sold to customers 
and L has satisfied its obligation to arrange for the points to be provided to the 
customer. L records the following entry.
Debit
Credit
Cash
1,000
Revenue (1,000 - 700)
300
Payable to third party
700
To recognise revenue when acting as agent for 
issuance of points

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284 | Revenue – IFRS 15 handbook
L is a principal
If L is acting as a principal with respect to the points, then it recognises revenue 
of 1,000 and an expense of 700 when its products are sold to customers and 
the points are transferred to the customer. L records the following entry.
Debit
Credit
Cash
1,000
Expense
700
Revenue
1,000
Payable to third party
700
To recognise revenue when acting as principal for 
issuance of points
Example 12B – Third party customer loyalty programme (2)
Company M participates in a customer loyalty programme operated by a third