JCP » Topics » Gift Card Revenue Recognition

These excerpts taken from the JCP 10-K filed Mar 31, 2009.

Gift Card Revenue Recognition

At the time gift cards are sold, no revenue is recognized; rather, a liability is established for the face amount of the card. The liability remains recorded until the earlier of redemption, escheatment or 60 months. The liability is relieved and revenue is recognized when gift cards are redeemed for merchandise. We escheat a portion of unredeemed gift cards according to Delaware escheatment requirements that govern remittance of the cost of the merchandise portion of unredeemed gift cards over five years old. After reflecting the amount escheated, any remaining liability after 60 months (referred to as breakage) is relieved and recognized as a reduction of SG&A expenses as an offset to the costs of administering the gift card program. It is our historical experience that the likelihood of redemption after 60 months is remote. The liability for gift cards is recorded in accrued expenses and other current liabilities on the Consolidated Balance Sheets and was $215 million and $231 million at January 31, 2009 and February 2, 2008, respectively.

Gift Card Revenue
Recognition

At the time gift cards are sold, no revenue is recognized; rather, a liability is established for the face amount of the card. The
liability remains recorded until the earlier of redemption, escheatment or 60 months. The liability is relieved and revenue is recognized when gift cards are redeemed for merchandise. We escheat a portion of unredeemed gift cards according to
Delaware escheatment requirements that govern remittance of the cost of the merchandise portion of unredeemed gift cards over five years old. After reflecting the amount escheated, any remaining liability after 60 months (referred to as breakage) is
relieved and recognized as a reduction of SG&A expenses as an offset to the costs of administering the gift card program. It is our historical experience that the likelihood of redemption after 60 months is remote. The liability for gift cards
is recorded in accrued expenses and other current liabilities on the Consolidated Balance Sheets and was $215 million and $231 million at January 31, 2009 and February 2, 2008, respectively.

STYLE="margin-top:12px;margin-bottom:0px">Cost of Goods Sold

Cost of goods sold includes all costs
directly related to bringing merchandise to its final selling destination. These costs include the cost of the merchandise (net of discounts or allowances earned), sourcing and procurement costs, buying and brand development costs, including
buyers’ salaries and related expenses, freight costs, warehouse operating expenses, merchandise examination, inspection and testing, store merchandise distribution center expenses, including rent, and shipping and handling costs incurred
related to Direct sales to customers.

This excerpt taken from the JCP 10-K filed Apr 1, 2008.

Gift Card Revenue Recognition

At the time gift cards are sold, no revenue is recognized; rather, a liability is established for the face amount of the card. The liability remains recorded until the earlier of redemption, escheatment or 60 months. The liability is relieved and revenue is recognized when gift cards are redeemed for merchandise. The Company escheats a portion of unredeemed gift cards according to Delaware escheatment requirements that govern remittance of the cost of the merchandise portion of unredeemed gift cards over five years old. After reflecting the amount escheated, any remaining liability after 60 months (referred to as breakage) is relieved and recognized as a reduction of Selling, General and Administrative (SG&A) Expenses as an offset to the costs of administering the gift card program. It is the Company’s historical experience that the likelihood of redemption after 60 months is remote. The liability for gift cards is recorded in Accrued Expenses and Other Current Liabilities on the Consolidated Balance Sheets and was $231 million at both February 2, 2008 and February 3, 2007.

This excerpt taken from the JCP 10-K filed Apr 4, 2007.
Gift Card Revenue Recognition
At the time gift cards are sold, no revenue is recognized; rather, a liability is established for the face amount of the card. The liability is relieved and revenue is recognized when gift cards are redeemed for merchandise. The liability remains recorded until the earlier of redemption, escheatment or 60 months. After 60 months, any remaining liability is relieved and recognized as a reduction of Selling, General and Administrative (SG&A) Expenses. It is the Company’s historical experience that the likelihood of redemption after 60 months is remote. The liability for gift cards is recorded in Accrued Expenses and Other Current Liabilities on the Consolidated Balance Sheets and was $231 million at February 3, 2007 and $219 million at January 28, 2006.
 
This excerpt taken from the JCP 10-K filed Apr 6, 2006.

Gift Card Revenue Recognition

At the time gift cards are sold, no revenue is recognized; rather, a liability is established for the face amount of the card. The liability is relieved and revenue is recognized when gift cards are redeemed for merchandise. The liability remains recorded until the earlier of redemption, escheatment or 60 months. After 60 months, any remaining liability is relieved and recognized as a reduction of Selling, General and Administrative (SG&A) Expenses. It is the Company’s historical experience that the likelihood of redemption after 60 months is remote. The liability for gift cards is recorded in Accrued Expenses and Other on the Consolidated Balance Sheets and was $219 million at January 28, 2006 and $207 million at January 29, 2005.

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