They didn’t provide proof of that allegation. At least, not in this article. The consumer group alleges that Starbucks claims unused gift card balances as revenue. Are we sure they aren’t showing a liability for the respective amount? I didn’t look through their corporate filings, and the article doesn’t provide citations from public filings. Just accusations.
I’m no law expert, but I have dealt with POS and retailers, and their tax people. My understanding is that you always report the loading of a gift card as a liability. It may be categorized as a different liability because you don’t necessarily owe that money back. As in, most gift cards are non refundable.
When the holder of the gift card redeems it for products, the balanced used gets deducted from your liability and is added to revenue.
If Starbucks were straight reporting it as revenue with no explanation, I can see that being scrutinized. But if they are reporting it as potential revenue, then that’s up to shareholders to weed through that and make investments based on that.
They didn’t provide proof of that allegation. At least, not in this article. The consumer group alleges that Starbucks claims unused gift card balances as revenue. Are we sure they aren’t showing a liability for the respective amount? I didn’t look through their corporate filings, and the article doesn’t provide citations from public filings. Just accusations.
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I’m no law expert, but I have dealt with POS and retailers, and their tax people. My understanding is that you always report the loading of a gift card as a liability. It may be categorized as a different liability because you don’t necessarily owe that money back. As in, most gift cards are non refundable.
When the holder of the gift card redeems it for products, the balanced used gets deducted from your liability and is added to revenue.
If Starbucks were straight reporting it as revenue with no explanation, I can see that being scrutinized. But if they are reporting it as potential revenue, then that’s up to shareholders to weed through that and make investments based on that.
I’m not understanding the illegality here.
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