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This topic comprises 5 pages: 1 2 3 4 5
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Author
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Topic: AMC Joins The Subscription Service Wars
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Harold Hallikainen
Jedi Master Film Handler
Posts: 906
From: Denver, CO, USA
Registered: Aug 2009
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posted 08-11-2018 05:46 PM
On when to recognize gift card income, I agree with Marcel. The difference is whether you are using cash or accrual accounting. In the US, if you have an inventory, you are required to use accrual (but this does not really apply to the exhibition industry). I really like accrual because I believe it's more accurate. So, as posted before, the "sale" of a gift card results in a debit to cash and a credit to Gift Card Liability. The redemption of the gift card is the actual "sale" that results to a debit to Gift Card Liability and a credit to Movie Admissions Income. Magazines and other subscriptions use this same accounting. When you buy the subscription for future delivery of magazines, they debit cash and credit a liability since they now owe you magazines. As they deliver them, they recognize the sale. I do a similar thing for a dance festival ( http://www.cccds.org/ContraCarnivale/ ) where I am the treasurer. As people prepay admissions our cash asset and prepaid admissions liability increase. When we "deliver" the dance, we credit income and debit the prepaid admissions liability to recognize the income.
The issue of gift cards never being redeemed is interesting. I wonder if this can be considered "unclaimed property" as described at https://en.wikipedia.org/wiki/Lost,_mislaid,_and_abandoned_property#Abandoned_property . I've claimed a few dollars from savings accounts from when I was a kid, a telephone company deposit, and things like that. A quick (very non-exhaustive) search indicates that some states treat expired gift cards as abandoned or unclaimed property while some do not ( https://www.creditcards.com/credit-card-news/unclaimed-gift-card-money-1271.php ). So, those issuing gift cards may want to check into what their state requires!
Harold
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