Accounting for gift cards: an emerging issue for retailers and auditors.
Journal of Accountancy › Vol. 204 Nbr. 5, November 2007
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Accounting for gift cards: an emerging issue for retailers and auditors.
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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. The National Retail Federation said 2006 holiday sales (those occurring in November and December) of gift cards were $27.8 billion. Overall holiday sales were $663 billion, according to the U.S. Commerce Department. Independent financial services research firms have estimated holiday gift card sales were as much as $75 billion. In fact, no one really knows the aggregate effect of gift card transactions because retailers rarely provide separa...See the full content of this document
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