MeesaCard Credit Card Company Offers a Loyalty Program to Its

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?