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To: Minn

It is part of GAAP, it is seen as simply exchanging one piece of currency for another. In other words, the way GAAP sees it, it is like exchanging two ten dollar bills for a twenty. They can’t count it as a sale until the twenty is exchanged for an actual good or service. You can’t count the exchange of currency as a twenty dollar transaction because you have actually not increased your net.

Like I said, it is a convoluted mass of rules.


35 posted on 12/22/2010 6:44:07 PM PST by mnehring
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To: mnehring
It is part of GAAP, it is seen as simply exchanging one piece of currency for another.

Except the $50 in cash cost the store, well, $50 (in COGS + profit) to obtain. While the gift card cost the store a few cents.

The gift card out in circulation is a potential liability, while what was paid for it is a very real asset. Seems obvious enough.

45 posted on 12/22/2010 6:50:10 PM PST by Minn
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