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City Goods Limited $($CG$)$ is a sports clothing and equipment retailer that has a chain of

$10$ stores across Canada. You have just been hired as the new controller for the

company. You are currently meeting with the CFO to discuss some accounting$-$related

topics that have arisen in the preparation of the company's January $31,2024$ financial

statements. CG is a private company. The following is a summary of your notes from

this meeting.

$1.$ Customer loyalty program: In this fiscal year, the company implemented a new

customer loyalty program that grants $$CG points$$ to members based on the

amount they spend in the store. The points have no expiry date and can be

redeemed against future purchases in the store. The company has already

determined that the fair value of each point is $$0\mathrm{.}50.$ During the year, $700,000$

points were awarded to members, of which $80,000$ were subsequently redeemed

for purchases in the stores. The company anticipates that $90\%$ of the points will

be redeemed at some point in time.

$2.$ The company entered into an agreement on April $1,2020,$ to lease a retail

location for five years. In December $2023,$ CG decided to close that retail location

due to very poor sales. The company has not been able to sublet the premises

and is not able to terminate the lease agreement. The lease payment, which

includes all operating costs, is $$2,300$ per month.

Instructions

For each of the two issues above, explain the situation and the appropriate accounting

treatment under ASPE and IFRS. Show any required journal entries. Where necessary,

use a discount rate of $0\mathrm{.}5\%$ per month.

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