Methods to Track Gift Cards and Similar Items

[DaveC49]

The gift card is clearly an asset. When you receive it it is income. In most
jurisdictions one would expect gift income to be not taxable however this
may not always be the case.

I generally have income streams that are both taxable and non-taxable so I
already have placeholder subaccounts of Income for Taxable and Non-taxable
income. When you receive a gift card the transaction would look like:

                                                      Db                  Cr
Asset:Giftcards                                $50
Income:NonTaxable:Giftcards                                 50

and when you use the gift card it is like any other expense

                                                      Db                  Cr
Asset:Giftcards                                                     $50
Expense: ...                                    50

If the income was taxable you would place the giftcards account under a
taxable placeholder instead of a non-taxable placeholder.

The treatment for a credit card issued for a returned item is slightly
different though. It is still an asset but instead of having the associated
income split it will have an credit entry to an expense account cancelling
the previous debit entry for the purchase.

"Rigorous, double-entry accounting is not essential.  Imbalance on one side
of a transaction is OK. "  

As Gnucash is a double entry accounting system it is unlikely that any
method which has an imbalance is likely to produce a satisfactory result and
may result in inaccurate reports. 

David Cousens



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David Cousens
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