The following information was taken directly from the footnotes to the financial statements of Best Buy. 1. “A gift card liability is initially established for the value of gift cards when they are sold. We recognize revenue from gift cards when the cards are redeemed by customers.” 2. “Advertising costs, which are included in SG&A, are expensed when the advertisement is customer-facing.” 3. “We compute depreciation using the straight-line method over the estimated useful lives of the assets.” 

a. Discuss what is meant by each of the above footnote items. 

b. As noted, Best Buy establishes a liability to record the sale of gift cards. Assume that you purchase a $100 gift card from Best Buy as a birthday present for a friend. Prepare the journal entries made by Best Buy to record (1) your purchase of the gift card and (2) the use of the gift card by your friend to purchase a $100 set of headphones. 

c. Discuss how the matching principle relates to Best Buy’s treatment of advertising expense.