Reference no: EM132893971

An entity, a grocery retailer operates a customer loyalty program. The entity grants program members loyalty points when they spend a specified amount on groceries. Program members can redeem the points for further groceries. The points have no expiry date. During 2020, the sales amounted to P7,200,000 based on a stand-alone selling price. During the year, the entity granted 10,000 points. But management expected that only 80% or 8.000 points will be redeemed. The stand-alone selling price of each loyalty point is estimated at P100. On December 31. 2020, 4.000 points were redeemed while in 2021, 900 points were redeemed. Further, during 2021, the management revised its expectations and now expects that 90% or 9,000 points will be redeemed altogether.

Question 1: What amount should be reported as (1) sales revenue including the revenue earned from points during 2020 and (2) revenue earned from loyalty points for 2021?