A finished ACC-682 Topic 7 breakage estimate workpaper example, deriving a 5.5 percent rate from redemption curves, excluding amounts owed to states and documented so a reviewer reproduces $1.1 million. Searches like "acc 682 topic 7 assignment example", "acc682 topic 7 sample" and "acc-682 topic 7 example" land here.
What a finished ACC-682 Topic 7 breakage estimate workpaper looks like
The finished workpaper opens with the estimate and the rule it applies: under ASC 606, expected breakage is recognized in proportion to the pattern of redemptions, and only for amounts the company expects to keep. Figures are illustrative. Sixty monthly issuance cohorts show 91.5 percent of card value redeemed by month 36 and almost nothing after, leaving 8.5 percent expected unredeemed. Unclaimed property rules in the states concerned require about 3.0 points of that to be remitted, so the breakage rate is 5.5 percent of value issued. Applied to $18.3 million of redemptions this year, the proportional method recognizes $1.1 million. Promotional cards given away free are excluded, since no customer paid for them. The gift card subledger, $14.2 million at year end, agrees to the ledger, and a second accountant's rerun of the stored query returned the same figure.
How an ACC-682 Topic 7 example is structured
The workpaper is laid out so each figure can be traced back to a stored source without asking anyone. A purpose block names the estimate, the guidance it applies and the period. The sources block lists the issuance and redemption tables, the system that holds them, their owner and the date each was drawn. Transformations follow in the order they run, from removing promotional and voided cards to building cohorts and computing cumulative redemption by month, with the card count after each step. The two parameters, the 36-month cutoff and the remittance share by state, are stated separately, each with the evidence that set it. The computation shows the ratio of breakage to expected redemptions applied to this year's redemptions. Governance closes the paper: the query's stored name, who may change it, the change log, the reconciliation to the ledger and the reviewer's rerun.
Sources named down to the table
Issuance and redemption tables are identified by system, owner and extraction date, so a reviewer can pull the same records rather than a similar set.
Promotional cards removed before any curve
Cards given away free carry no customer payment, so they are excluded first, and the count after that step is recorded with the others.
Amounts owed to states kept out
About 3.0 points of expected unredeemed value must go to states under unclaimed property rules, so it stays a liability and never becomes breakage revenue.
Recognition tied to the redemption pattern
Breakage of 5.5 percent against expected redemptions of 91.5 percent sets the ratio applied to this year's $18.3 million of redemptions, giving $1.1 million.
Query control and a rerun recorded
The stored query has a named owner and a change log, and a second accountant's rerun matching $1.1 million is signed on the workpaper.
Where marks go in ACC-682 Topic 7
The heaviest loss on this workpaper is a correct figure nobody else can produce, since an estimate living in its preparer's memory cannot be reviewed. Papers that describe the method in prose and omit the stored query, the filters or the extraction dates leave a reviewer to rebuild the work. Recognizing all expected unredeemed value as breakage ignores what the company must remit to states, and overstates revenue by the 3.0 points. Including promotional cards inflates the base with value no customer paid for. Recognizing breakage when cards expire, or at a fixed date, rather than in proportion to redemptions, applies a method the guidance does not use for an entity that expects breakage. Workpapers that skip governance, with no owner for the query and no change log, cannot show that next year's figure comes from the same logic.
Get an ACC-682 Topic 7 example written to your instructions
Send the ACC-682 Topic 7 instructions, the rubric and the data or estimate your section is documenting. A custom example is written to them, with sources identified to the table, transformations listed in order with counts, parameters evidenced, the computation shown, governance recorded and a reviewer's rerun documented, back in 24 to 48 hours. The first one is free.
ACC-682 Topic 7 questions, answered
How is gift card breakage recognized under ASC 606?
If a company expects to be entitled to breakage, it recognizes the expected amount as revenue in proportion to the pattern of redemptions, subject to the constraint on variable consideration. If it does not expect breakage, it recognizes unredeemed amounts only when the chance of redemption becomes remote. Either way, amounts the company must remit to a government under unclaimed property laws remain a liability.
Why record who may change the query?
Because an estimate built from a stored query is only as stable as the query. If anyone can edit it without a record, next year's breakage may come from different logic while the workpaper looks the same. Naming an owner, restricting changes and keeping a log is the data governance that lets a figure be compared year to year and relied on in the statements.
What does the reviewer's rerun prove?
That the documentation is complete enough for someone else to follow. The second accountant used only the workpaper, the stored query and the named tables, and reached $1.1 million with no question put to the preparer. A rerun that needed a conversation would reveal a missing step. The rerun does not prove the parameters are right; the evidence for those is documented separately.