What it is
Gift cards sit in the books as a contract liability until the customer redeems them, the retailer recognizes breakage, or a state claims the balance. Each of those three paths needs support, and the liability rarely agrees to the point-of-sale report without a reconciliation.
This workbook rolls the liability forward from the activity, computes breakage by issuance vintage under the proportional or the remote method, and sizes the unclaimed property exposure by state. Each tab ties to the general ledger.
When to use it
- At year end, to support the gift card liability and the breakage revenue recorded.
- When the retailer changes its breakage estimate or the redemption pattern shifts.
- Before an unclaimed property filing or an audit by a state.
What’s inside
- Rollforward tab with expected closing liability and a tie to the ledger
- Breakage tab with 12 vintage rows, a method selector and a check of breakage recorded against required
- Unclaimed property tab with 20 state rows, dormancy period, statutory exemption and remittances
- Flags for redemptions above issuance and for balances not yet remote
Standard cited
This template follows ASC 606. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
When can a retailer recognize breakage?
If the retailer expects to be entitled to breakage, it recognizes it in proportion to the pattern of redemptions. If it does not expect to be entitled, it recognizes breakage when the likelihood of redemption becomes remote. The estimate has to be based on redemption history.
Why is unclaimed property a separate tab?
Where state law requires unredeemed balances to be remitted, the retailer is not entitled to keep them, so breakage is not recognized on those amounts. Dormancy periods and exemptions vary by state.
Is there a default breakage rate?
No. The percentage is an input from your own redemption history by vintage. The workbook carries no default.
Related templates
- Retail Sales Returns Reserve Calculation
- Audit Program: Retail and E-commerce
- ASC 606 Revenue Recognition Schedule
- Deferred Revenue Rollforward and Ratable Recompute
Last updated 11/05/2026. All free templates.