Final answer:
GoodBuy should recognize $849,000 as gift card revenue for 2018, by adding the $810,000 of gift cards redeemed with the $39,000 recognized from breakage, as revenue is recognized when earned.
Step-by-step explanation:
To determine how much gift card revenue GoodBuy should recognize in 2018, we need to follow the revenue recognition principle which states that revenue is recognized when it is earned, regardless of when the payment is received. In this case, revenue is earned when gift cards are redeemed for products. Based on the information provided, GoodBuy sold $960,000 worth of gift cards, and $810,000 worth of these cards were redeemed for products by the end of 2018.
In addition to this, GoodBuy has a policy that concludes some gift cards will never be redeemed, known as 'breakage.' As of December 31, 2018, the company determined that $39,000 worth of gift cards have passed the expiration period and are unlikely to be redeemed. This amount can also be recognized as revenue in 2018.
So, the total gift card revenue GoodBuy should recognize for the year 2018 is the sum of the value of cards redeemed and the breakage. That is $810,000 (redeemed cards) + $39,000 (breakage) = $849,000. Therefore, GoodBuy should recognize $849,000 in gift card revenue for 2018.