Reference no: EM132858183

Question - Hui Hardware takes pride as the "shop around the corner" that can compete with the big-box home improvement stores by providing good service from knowledgeable sales associates (many of whom are retired local handymen). Hui has developed the following two revenue arrangements to enhance itsrelationships with customers and increase its bottom line ($ in thousands).

1. Hui sells a specialty portable winch that is popular with many of the local customers for use at their lake homes (putting docks in and out, launching boats, etc.). The Hui winch is a standard manufacture winch that Hui modifies so the winch can be used for a variety of tasks. Hui sold 70 of these winches during 2015 at a total price of $21,000, with a warranty guarantee that the product was free of any defects. The cost of winches sold is $16,000. The assurance warranties extend for a 3-year period with an estimated cost of $2,100. In addition, Hui sold extended warranties related to 20 Hui winches for 2 years beyond the 3-year period for HK$400 each.

2. To bolster its already strong customer base, Hui implemented a customer loyalty program that rewards a customer with 1 loyalty point for every $10 of purchases on a select group of Hui products.

Each point is redeemable for a $1 discount on any purchases of Hui merchandise in the following 2 years. During 2015, customers purchased select group products for $100,000 (all products are sold to provide a 45% gross profit) and earned 10,000 points redeemable for future purchases. The standalone selling price of the purchased products is $100,000. Based on prior experience with incentives programs like this, Hui expects 9,500 points to be redeemed related to these sales (Hui appropriately uses this experience to estimate the value of future consideration related to bonus points).

Required - Identify and explain the 5 steps of IFRS 15 for the above revenues.