Determine what is the amount of the liability that polk

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Beginning the year 2015, the Polk Company began marketing a new beer called "Serbesa". To help promote the product, the management of Polk is offering a special Serbesa beer mug to each customer for every 20 specially marked bottles of Serbesa. Polk estimates that out of the 300,000 bottles of Serbesa sold during 2015, only 30% of the bottle caps will be redeemed. For the year 2015, 5,000 beer mugs were purchased by the company at a total cost of P140, 000. A total of 4,000 mugs were already distributed to customers.

REQUIRED:

Question (a) What is the amount of the liability that Polk should report on its December 31, 2015 statement of financial position?

Question (b) How much is the premium expense reported on Polk's profit or loss for the year ended December 31, 2015?

Reference no: EM132578304

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