Accounting for Gift Cards

Black Friday, so called because it kicks off the holiday shopping season that retailers hope will bring the $4.7 trillion industry into the black, is just weeks away. But last year, continuing a growing trend, more shoppers chose to purchase gift cards rather than merchandise, skewing some sales rep...

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Veröffentlicht in:Journal of Accountancy 2007-11, Vol.204 (5), p.38
1. Verfasser: Kile, Charles Owen
Format: Magazinearticle
Sprache:eng
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Zusammenfassung:Black Friday, so called because it kicks off the holiday shopping season that retailers hope will bring the $4.7 trillion industry into the black, is just weeks away. But last year, continuing a growing trend, more shoppers chose to purchase gift cards rather than merchandise, skewing some sales reports. This article examines the varying accounting treatments for gift card sales and their subsequent redemption patterns. Gift cards offer buyers and gift recipients a variety of product choices but restrict those choices to a single or limited number of retail service providers. Perhaps the greatest benefit to retailers is that historical consumer behavior trends show that a portion of many gift card purchases will never be redeemed. The SEC has not taken a public position on gift card accounting, except to advise that the staff does not view immediate recognition of any amount of revenue at the point of sale as consistent with the staff's view of GAAP.
ISSN:0021-8448
1945-0729