Gift Card Liability Calculator

Work out gift card liability instantly with clear inputs, formula shown and shareable results.

About Gift Card Liability Calculator

Gift cards create a deferred revenue liability until redeemed. Breakage — the portion expected never to be used — is recognised progressively as cards age, because non-redemption only becomes probable with time. This model releases it linearly over a 24-month observation horizon.

Formulas

Outstanding balance

Outstanding = Cards issued - Value redeemed

Breakage recognisable

Recognisable = Expected breakage x min(1, Months since issue / 24)

Carrying liability

Liability = Outstanding balance - Breakage recognisable

Worked example

With the default values below, Gift Card Liability Calculator returns Gift card liability to carry of $3,960,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Gift cards issued: 18,000,000
Value redeemed to date: 13,200,000
Expected breakage: 8
Average months since issue: 14

Results

Gift card liability to carry: $3,960,000.00
Outstanding unredeemed balance: $4,800,000.00
Breakage recognisable as revenue: $840,000.00
Redemption rate to date: 73.33%

Step by step

1Values used
2Outstanding balance
3Breakage recognisable
4Carrying liability
5Gift card liability to carry= 3,960,000.00
6Outstanding unredeemed balance= 4,800,000.00
7Breakage recognisable as revenue= 840,000.00
8Redemption rate to date= 73.33

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

When can breakage be recognised?

When it becomes probable that the card will not be redeemed, based on historical patterns, and where local law does not require indefinite honouring.

Do escheatment rules affect this?

Yes. Some jurisdictions require unredeemed balances to be remitted to the state, which removes breakage as an earnings item entirely.