Customer loyalty programmes are programmes whereby customers who buy goods or services are awarded credits such as reward points or travel miles by an entity. This playlist contains sample videos of the tabaldi ifric customer loyalty programmes revenue video series. Interpretation ifric customer loyalty programmes as amended, issued by the international accounting standards board iasb. Ifric and its accompanying documents have been amended by improvements to ifrss, issued in may 2010. Amended by improvements to ifrss fair value of award credits effective for annual periods beginning on or after 1 january 2011. Listing of international financial reporting standards. Ifric customer loyalty programmes, its effects on the information quality of. Ifric customer loyalty programmes its effects on the. Ifric 3 ifric interpretation customer loyalty programmes ifric is set out in paragraphs 111 and the appendix. Industry views telecommunications industry accounting group. Ifric 15 addresses how real estate developers should recognise revenue for the sale of units, such as flats or houses, before construction is complete. If a customer buys goods or services, the entity grants the customer award credits often described as points. In particular, the ifric wanted to clarify whether, in the flowchart, the sale of land would be.
Ifric will be superseded by ifrs 15 revenue from contracts with customers which has a mandatory effective date of 1 january 2018. Ifric states that approach a above is the correct interpretation of ifrs. Ifric customer loyalty programmes was developed by the international financial reporting interpretations committee and issued by the international accounting standards board in june 2007. Decisions become final only after the ifric has taken a formal vote on an interpretation or draft interpretation, which is confirmed by the iasb. Hedges of a net investment in a foreign operation ifric 17.
This interpretation addresses the accounting by entities that provide their customers with incentives to buy goods or services. Ifric addresses accounting by entities that grant loyalty award credits such as points or travel miles to customers who buy other goods or services. Customer loyalty programmes ias 39 financial instruments. Ifric customer loyalty programmes effective date periods beginning on or after 1 july 2008 recognition of revenue applying ias 18 specific quantitative disclosure requirements. Accounting for customer loyalty programmes purpose the purpose of this paper is to present the views and challenges from a range of accounting professionals. Effective for annual periods beginning on or after 1 january 2008. Ifric has developed ifric customer loyalty programmes that regulate these programs so that they can be accounted for in an equal manner. Ifric customer loyalty programmes the board has not undertaken any specific implementation support activities relating to this interpretation. Paragraphs that have been added to this interpretation and do not appear in the text of ifric are identified with the prefix aus, followed by the number of the preceding ifric paragraph and decimal numbering. Ifric interpretation customer loyalty programmes ifric customer loyalty programmes was developed by the international financial reporting interpretations committee and issued by the international accounting standards board in june 2007. An entity grants to its customers as part of a sales transaction, i.
Entities use loyalty programmes to incentivise customers to buy additional goods or services. Revenue, ifric, customer loyalty programmes, ifric 15, agreements for the construction of real estate, ifric 18, transfers of assets from customers and sic 31, revenuebarter transactions involving advertising services. Air travel and loyalty points the main change from ifric customer loyalty programmes relates to the estimation method 5 how will you estimate the standalone selling price for air travel. Ifric customer loyalty programmes financial analysis. Entities use loyalty programmes to incentivise customers to buy additional. Superseded by ifrs 15 revenue from contracts with customers. Ifric customer loyalty programmes, its effects on the information quality of companies accounting.
Ifric will be superseded by ifrs 15 revenue from contracts with customers which has a. Aasb interpretation customer loyalty programmes as amended is set out in paragraphs 1 11 and the appendix. According to ifric , a customer loyalty programme has the following characteristics. From 1 july 2008 ifric becomes mandatory in australia, requiring a standardised deferred revenue treatment to account for a plethora of customer loyalty programmes clp. From 1 july 2008 ifric becomes mandatory in australia. Customer loyalty programmes have grown more widespread in recent years and are now being offered with all types of product and service purchases. Updated september 2019 a closer look at ifrs 15, the revenue recognition standard 4 contents. Scope consensus ifric applies to customer loyalty award credits that. The ifric supported this first part of the flowchart but asked the staff to clarify what was meant by real estate sale component. Ifric 15 agreements for the construction of real estate. The purpose of this paper is to present the views and challenges from a range of accounting professionals, regulators and preparers with the introduction of a standardised approach to accounting for customer loyalty programmes clps. Ifric customer loyalty programmes, ifric 15 agreements for the construction of real estate, ifric 18 transfers of assets from customers and sic31 revenue.
Hk ifric int customer loyalty programmes 7 hk ifric int april 2012february 2014 illustrative examples these examples accompany, but are not part of, hk ifric int. Entities grant credits in the form of points to customers with each purchase of goods or services. Ifric ifric interpretation customer loyalty programmes ifric is set out in paragraphs 111 and the appendix. Ifric customer loyalty programmes its effects gupea. Background on ifric customer loyalty programmes many entities operate schemes that are designed to encourage those who buy their goods or services to buy further goods or services from them.
The costs and benefits of implementing ifric customer. Interpretations are listed in australian accounting standard aasb 1048 interpretation of standards. Instead they will either be applying a variant of the accounting required by ifric or will be treating the sales transaction as involving just a single component and, as a result, providing for the cost of awards. The effective date of the latest amendment is 1 january 20. Ifric ifric interpretation customer loyalty programmes references ifrs fair value measurement ias 8 accounting policies, changes in accounting estimates and errors ias 18 revenue ias 37 provisions, contingent liabilities and contingent assets background 1 customer loyalty programmes are used by entities to provide customers with incentives to buy. Ifric requires entities to account for award credits as a separately identifiable component of the sales transactions in which they are granted. Cl o9 ifric d20 customer loyalty programmes dasc comment letter. Up until now there has been little guidance on accounting for these programmes. Ifric customer loyalty programmes effects study report 5 programmes within the scope of ifric will not be.
Ias 19 the limit on a defined benefit asset, minimum funding requirements and their interaction ifric 15. When accounting for customer loyalty programs today, companies have to follow the rules of ias 18 which offers two ways of accounting. Draft ifric due d20 customer process handbook loyalty. This part presents the following accompanying documents. Examples of such schemes are air miles earned by passengers from airlines, free. Draft ifric due process handbook d20 customer loyalty programmes ias 18 revenuerevenue. Purpose the purpose of this paper is to present the views and challenges from a range of accounting professionals, regulators and preparers with the introduction of a standardised approach to accounting for customer loyalty programmes clps.
Ifric was issued to bring consistency and comparability to accounting for loyalty programmes across industry sectors. Ifric interpretation customer loyalty programmes the text of the unaccompanied ifric is contained in part a of this edition. Ifric is effective for annual periods beginning on or after 1 july 2008. Hkifricint customer loyalty programmes 5 hkifricint april 2012february 2014 effective date and transition 10 an entity shall apply this interpretation for annual periods beginning on or after 1 july 2008. Cl 8 ifric d20 customer loyalty programmes uk asb comment letter.
Ifric interpretation customer loyalty programmes ifric is set out in paragraphs 111 and the appendix. The companies can follow paragraph or paragraph 19 and therefore practice is varying and the companies accounting is not comparable. The accounting practice for customer loyalty arrangements in the telecoms sector has been varied. Ifric is accompanied by illustrative examples and a basis for conclusions. An ifric member suggested that the scope of the draft. Ifric customer loyalty programmes on 28 june 2007, the international financial reporting interpretations committee ifric issued a new interpretation entitled customer loyalty programmes. Accounting for customer loyalty programmes purpose the purpose of this paper is to present the views and challenges from a.
These principles are then illustrated practically in class examples that focus on journalising the recognition and measurements principles contained in the interpretation. Agreements for the construction of real estate ifric 16. Customer loyalty programmes are used by entities to provide customers with. The scope and authority of interpretations are set out in paragraphs 2 and716 of the preface to international financial reporting standards. Example 1awards supplied by the entity ie1 a grocery retailer operates a customer loyalty programme. The scope and authority of interpretations are set out in paragraphs 2 and 717 of the preface to international financial reporting standards. It aims to highlight the ambiguities of the classification of commercial transactions, particularly the nature and timing. The ifric met in london on 11 and 12 january 2007, when it discussed. Ifric addresses how an entity accounts for loyalty award credits that entitle customers to free or discounted goods or services for example, airline frequent. The residual method may no longer be available for air tickets sold with loyalty points.
These credits can be redeemed in the future for free or discounted goods. Accounting for customer loyalty programmes request. Ifric customer loyalty programmes has recently been issued by. Ifric applies to customer loyalty award credits that. It then goes on to provide guidance on how the approach should be implemented. According to ifric, a customer loyalty programme has the following characteristics.
These customer loyalty programmes can take many different forms. Such programmes are often used by companies operating in e. The allocation of revenue between air travel and loyalty points will. Ifric is accompanied by illustrative examples and a basis for.
The ifrs foundations logo and the ifrs for smes logo, the iasb logo, the hexagon device, eifrs, ias, iasb, ifric, ifrs, ifrs for smes, ifrs foundation, international accounting standards, international financial reporting standards, niif and sic are registered trade marks of the ifrs foundation, further details of which are available from the ifrs. Ifric, customer loyalty programmes, addresses award programmes which typically involve the customer purchasing goods or services and the entity granting the customer awardcredits that can be used to obtain free or discounted goods or services in the future. If an entity applies the interpretation for a period. Under the current indian gaap, accounting standard as 7, construction contracts and as 9, revenue recognition.