Customer loyalty points and material rights (IFRS 15)
Under IFRS 15, an option to obtain future goods or services at a discount or free of charge is assessed to determine whether it provides a material right that the customer would not receive without the current contract. If it does, the option is a separate performance obligation; allocate consideration to it using applicable stand-alone selling-price requirements and recognise the allocated revenue when or as that obligation is satisfied. Assess the facts rather than treating every loyalty offer as a material right.
Worked example
A retailer sells goods for $100 and grants points that give the purchaser a material right to future goods. If the allocated transaction price is $90 to the goods and $10 to the points, it recognises $90 when control of the goods transfers and the remaining $10 as a contract liability until it recognises revenue for the points under the applicable requirements.
Common mistake
Recognising all $100 immediately without assessing a material right, or assuming all future discounts automatically create one.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Supporting | September 2026–June 2027 |
| ACCA | SBR | Supporting | September 2026–June 2027 |