ACCA · Question 16 · IFRS 15 Revenue from Contracts with Customers

Section B - Case 1

*AeroStream is a commercial airline. On 1 January 20X5, AeroStream entered into a contract with a corporate client to provide 10 specific charter flights during the year for a total fixed price of $50,000. As part of the contract, AeroStream also granted the client 50,000 loyalty points, which can be redeemed for future flights. The standalone selling price of one charter flight is $5,500. The standalone selling price of one loyalty point is estimated at $0.10.

Also on 1 January 20X5, AeroStream leased a new aircraft for 5 years. The lease requires annual payments of $200,000 in arrears. The implicit interest rate in the lease is 5%. The present value of the lease payments is $865,895. AeroStream incurred initial direct costs of $15,000 to negotiate the lease.*

Question:
Under IFRS 15, what percentage of the total transaction price ($50,000) should be allocated to the loyalty points?