Below is the excerpt of Home Depot's revenue recognition policy. How does Home Depot recognize the...

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Below is the excerpt of Home Depot's revenue recognition policy. How does Home Depot recognize the gift card breakage income? How does the recognition of gift card breakage income affect Home Depot's deferred revenue? (6%) "We further record deferred revenue for the sale of gift cards and recognize the associated revenue upon the redemption of those gift cards, which generally occurs within six months of gift card issuance. As of January 30, 2022 and January 31, 2021, our performance obligations for unredeemed gift cards were $1.0 billion and $839 2 million, respectively. Gift card breakage income, which is our estimate of the portion of our gift card balance not expected to be redeemed, is recognized in net sales and was immaterial in fiscal 2021, fiscal 2020, and fiscal 2019." Below is the excerpt of Home Depot's revenue recognition policy. How does Home Depot recognize the gift card breakage income? How does the recognition of gift card breakage income affect Home Depot's deferred revenue? (6%) "We further record deferred revenue for the sale of gift cards and recognize the associated revenue upon the redemption of those gift cards, which generally occurs within six months of gift card issuance. As of January 30, 2022 and January 31, 2021, our performance obligations for unredeemed gift cards were $1.0 billion and $839 2 million, respectively. Gift card breakage income, which is our estimate of the portion of our gift card balance not expected to be redeemed, is recognized in net sales and was immaterial in fiscal 2021, fiscal 2020, and fiscal 2019."

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Home Depot recognizes gift card breakage income as a component of net sales when it es... View the full answer