MeesaCard Credit Card Company Offers a Loyalty Program to Its

question 98

Essay

MeesaCard credit card company offers a loyalty program to its credit card users whereby the credit card company gives the credit card user points for amounts purchased from merchants when using the credit card. These points may be accumulated and redeemed for a number of different goods or services, including cash-back.
MeesaCard separately enters into arrangements with merchants under which the credit card company provides the financing for the transaction between the merchant and the credit card user, in return for which the credit card company receives a stated fee from the merchant. When the credit card user uses the credit card to make a purchase from a merchant, MeesaCard honors its agreement with the merchant and advances the merchant the funding for the amount of the transaction after deducting the fee to which the credit card company is entitled. However, as a result of that transaction, MeesaCard now also has an obligation to the credit card user to provide the specified number of points in the loyalty program.
Required:
a. How many performance obligations are involved in these activities?
b. Assuming there are two performance obligations, how would revenue be recognized?
c. Assuming there is only one performance obligation, how would revenue be recognized?

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Definitions:

Brightness

The perception of how light or dark a color appears; a visual sensation that depends on the illumination and color of objects.

Object Identity

The concept that objects are perceived as maintaining their identity despite changes in their appearance or context.

Visual Agnosias

A group of neurological disorders characterized by the inability to recognize familiar objects despite having functional eye sight.

Interpret Visual Information

The cognitive process of making sense of visual data, including recognizing patterns, objects, and scenes, essential for navigating the environment.