2. TurboCard credit card company offers a loyalty program to itscredit card users whereby the credit card company gives the creditcard user points for amounts purchased from merchants when usingthe credit card. These points may be accumulated and redeemed for anumber of different goods or services, including cash-back.TurboCard separately enters into arrangements with merchants underwhich the credit card company provides the financing for thetransaction between the merchant and the credit card user, inreturn for which the credit card company receives a stated fee fromthe merchant. When the credit card user uses the credit card tomake a purchase from a merchant, TurboCard honors its agreementwith the merchant and advances the merchant the funding for theamount of the transaction after deducting the fee to which thecredit card company is entitled. However, as a result of thattransaction, TurboCard now also has an obligation to the creditcard user to provide the specified number of points in the loyaltyprogram.
Required:
a. How many performance obligations are involved in theseactivities?
b. Assuming there are two performance obligations, how wouldrevenue be recognized?
c. Assuming there is only one performance obligation, how wouldrevenue be recognized?
