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Dark side of Starbucks app: Coffee giant accused of rigging payments to the tune of nearly $900 million over 5 years | Fortune (fortune.com)

submitted 11 months ago by [email protected] to c/[email protected]

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[–] [email protected] 3 points 11 months ago (1 children)

Nope, the money is counted as income straight away. Think about the process: person gives cash for gift card. Merchant now had the money and a promise to give that amount of inventory at a future date. Some of those promises are never acted upon, in which case merchant has the gift card money AND the merch which they can also sell.

[–] [email protected] 1 points 11 months ago (2 children)

Why would you comment on something you know nothing about?

Basic gift card revenue recognition

Companies cannot recognize revenue upon the initial sale of a gift card because of a key revenue recognition principle that states that revenue is recognized when or as an entity satisfies a performance obligation by transferring a promised good or service to a customer.

https://blog.leapfin.com/how-to-properly-recognize-gift-card-revenue

[–] [email protected] 2 points 10 months ago

This is a good read. And also looks like it does mentioned unredeemed gc balance can be (partially) considered as breakage income? ( I don't know anything about accounting, just want to point this out)

[–] [email protected] 0 points 10 months ago

Ha, completely forgot about this.

You should read that article carefully though. They even outline why this is a money maker later:

You might be wondering, how did I get $1650 in total revenue from a $1500 sale? Well, it’s true, because you were able to take 10% of the gift card in breakage income, and on an individual order/customer it can look funny, but on the whole, with your P&L, it’ll be offset by another gift card purchase not being used and money that was “indefinitely deferred!”

So, uhhh, I guess I'd ask, why would you comment on something about which you know nothing?