With increasing global convergence of accounting standards, integration of International Financial Reporting Standards (IFRS) materials in accounting curricula is gaining growing attention worldwide. The Spectacular Airlines case provides an opportunity for you to develop critical thinking skills by requiring you to apply basic accounting concepts to account for customer loyalty programs. It then asks you to identify and apply professional accounting literature to address accounting issues faced by the potential acquirer of Spectacular. Specifically, the case addresses the liability and revenue recognition issues for the frequent flyer plans of airlines, a context in which multiple conceptual approaches are possible and diverse accounting practices are followed. The case helps you to (1) improve your understanding of the importance of financial reporting issues in the context of a real-world business decision, such as cross-border mergers and acquisitions (M&A), (2) research U.S. GAAP and IFRS for addressing revenue recognition issues for customer loyalty programs, (3) understand complexities in the application of an accounting standard in a real-world setting, and (4) evaluate the effects of transition from the local GAAP to IFRS on businesses, their financial statements and ratios.

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