Money for Nothing

Home Depot reported revenue from unused gift cards. This would seem to be an interesting topic to bring before intermediate accounting students given Home Depot's rationale:

Home Depot calculated the $43 million in "breakage"—unredeemed value of cards sold—by analyzing historical redemption patterns and tallying the remaining balance of outstanding gift cards that are unlikely to be redeemed. But the cards have no expiration date or service fees, and cardholders can redeem their gift cards at any time.

Home Depot will regularly track income from unredeemed gift cards
"Our breakage reporting will never affect a customer that has an unused gift card," Smith said. "If there is a remaining balance on the card, the customer will always be able to use that card and be assured that the money is there and available for them to use in our stores."

This is interesting: Should HD recognize revenue when the cards have no expiration date?

The article goes on to detail:
About 12% of gift card value is never spent, according to research firm TowerGroup, Needham, MA. That will be about $5.7 billion in the U.S. this year, up from more than $4 billion in 2002, per TowerGroup.
Sales of retailers' gift cards will reach $47.5 billion this year; $50.8 billion in 2006; and top $57 billion in 2008, TowerGroup projects.

$5.7 BILLION in unused gift cards!!