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Case Study: Revenue Recognition - Services 20 Marks Passengers who travel on Qantas flights are allocated Qantas Frequent Flyer points.
Case Study: Revenue Recognition – Services 20 Marks
Passengers who travel on Qantas flights are allocated Qantas Frequent Flyer points. The entitled passengers not only derive the benefits associated with flight services they receive but they are also eligible to claim free flight services in respect of those ‚award points‛ at a later date.
In other words, two types of benefits are made available to Qantas frequent flyer members who travel on ‘point’s earnings flights’.
First, when frequent flyer members are provided with ‘points earning flights’ services, Qantas has fulfilled its contract of rendering transport to those members and therefore has earned that portion of the revenue. Secondly, frequent flyer members may also claim further travel benefit in the future under the Qantas Frequent Flyer Program.
Required: Evaluate Qantas’s policy for accounting of its frequent flyer program with reference to the Conceptual Framework IAS18 and Interpretation 13 Customer Loyalty Programme.
[Hint: Use Interpretation 13 in your solution to demonstrate Qantas is consistent with the recognition criteria in the Conceptual Framework]
