# Breakage

> Breakage — The portion of a prepaid right a customer is expected never to exercise — unused gift card balances, unredeemed credits. Recognized in proportion to the pattern of redemption if the entity expects breakage; otherwise when redemption becomes remote. Amounts owed to a state under unclaimed property law are a liability, not revenue.

Source: https://lopifi.com/glossary/breakage
Part of: Lopifi — US GAAP books on autopilot, reviewed by a CPA (https://lopifi.com)

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**What is breakage?** In accounting, breakage means the portion of a prepaid right a customer is expected never to exercise — unused gift card balances, unredeemed credits. Recognized in proportion to the pattern of redemption if the entity expects breakage; otherwise when redemption becomes remote. Amounts owed to a state under unclaimed property law are a liability, not revenue.

## Words this system refuses for it

- forfeit income
- write-back

- **Category:** Revenue recognition
- **Specified in:** [Lexicon](https://lopifi.com/md/docs/domain/11-lexicon)
- **Related:** escheatment, liability, revenue