The purpose of loyalty programs is to develop a long-standing customer relationship between the supplier and the consumer and to increase sales. There are the following two opposing views on how loyalty programs should be accounted for: 1. Credits granted to customers in a customer loyalty program can be accounted for as a separate component of the initial sales transaction in which the award credits are granted (a multiple elements approach). 2. Credits granted to customers in a customer loyalty program can be accounted for as an expense incurred in respect of the initial sale (a provision for future cost approach). In Draft Interpretation D20, Customer Loyalty Programs, the IFRIC rejects the use of the provision for future cost approach for all loyalty programs, as the IFRIC considers the multiple elements approach to be the most appropriate application of IAS 18. Although the multiple elements approach is logical and conceptually sound, one might argue that it is more complicated than recognizing the full revenue and an associated liability for the expected cost of supplying the awards.
Van der Schyf, D.B.(School of Accounting Sciences, University of Pretoria, 2008)
There is increasing academic pressure on Departments of Accounting in South Africa
whose academic programmes are accredited with the South African Institute of
Chartered Accountants (SAICA). The reason for this that the ...
This paper investigates the factors influencing the future of the IASB, using as the
point of departure, a review of its historical progression towards becoming the global
accounting standard-setting authority. It concludes ...
Shotter, Magdalena(Southern African Institute of Government Auditors, 2000)
An analysis of the major sources of influence on management accounting education in South Africa reveals that management accounting education in South Africa is largely based on neo-classical economic theory. Regarding the ...