Question

XYZ sells gift cards redeemable for XYZ products either in-store or online. During 2021, XYZ sold $2,000,000 of gift cards, and $1,800,000 of the gift cards were redeemed for products. As of December 31, 2021, $150,000 of the remaining gift cards had passed the date at which XYZ concludes that the cards will never be redeemed. How much gift card revenue should XYZ recognize in 2021

Answer 1

$1,950,000

Step-by-step explanation:

Total gift card revenue to be recognized in 2021 = $1,800,000 + $150,000 = $1,950,000. So, $1,950,000 is the amount of gift card revenue should XYZ recognize in 2021.

The value of gift cards redeemed along with those whose date of redemption has passed will both amount to revenue out of $2,000,000 of gift cards sold.