I'm trying to understand who owns the liability of a gift card that is sold by a 3rd party. For example, I purchase an itunes gift card at the grocery store. I know that the gift cards must be accounted for as a liability until used and only then can the value redeemed be recognized as revenue. How does this work when a 3rd party is involved? Does the liability sit on apple/itunes balance sheet or on the grocery store's balance sheet? If the liability is on the BS of apple then does the grocery store get to recognize revenue in full at the time of the purchase of the gift card?
USA 3rd party gift cards
- Thread starter mbruneau
- Start date
Your understanding is not completely correct.
But in a nut shell, the issuer of the card carries the liability and recieves the majority of the proceeds when the card is purchased.
The retailer keeps their commission or portion of the proceeds, from thence on it is an issuer problem.
But in a nut shell, the issuer of the card carries the liability and recieves the majority of the proceeds when the card is purchased.
The retailer keeps their commission or portion of the proceeds, from thence on it is an issuer problem.
Thank you for your fast reply. much appreciated. To clarify, the issuer is apple and the retailer is the grocery store.