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Explain how this transaction should be accounted

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Reference no: EM133165673

Question - YUMMY LTD - To stimulate the sales of its popcorn product, Yummy Company places 1 coupon in each box. 20 coupons are redeemable for a premium consisting of a cinema ticket which will cost £4 per ticket.

In 2021, the company sells 5,000,000 boxes of  at £5.40 per box. From its experience with other similar premium offers, the company estimates that 60% of the coupons issued will be mailed back for redemption. During 2021, 1,800,000 coupons are presented for redemption.

Required - Explain how this transaction should be accounted for in financial statements for year ending 31 Dec 2021.

Reference no: EM133165673

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