Squidward throws a bubble gum wrapper on SpongeBob's lawn. When SpongeBob discovers it, he asks Squidward if he can keep it. Squidward, who spots the paper as a worthless and useless pile of junk, says yes. SpongeBob asks him several more times to make sure that he doesn't want it, and Squidward assures him that he has no use for the paper, and sarcastically makes him promise to never give it back.
SpongeBob uses his imagination to have fun and do amazing things with the paper, and Squidward becomes jealous and attempts to take it back. However, SpongeBob refuses to give it back, as he promised not to. Squidward desperately begs SpongeBob for the paper, and is not successful until he agrees to trade everything he owns, including his house and shirt. However, Squidward does not have fun with the paper, and realizes that it is indeed completely worthless. Patrick then comes along, takes the paper from Squidward, and throws away his gum in it. Squidward, who has now given up everything he owns for nothing and is standing there naked, asks "Anyone have any sunscreen?"
Other than a few appearances of Gary, the Bikini Bottomites and Patrick's cameo in the end, this episode is all about SpongeBob and Squidward. Moreover, this is the first short that features anyone with more screentime than SpongeBob, that is, Squidward.
A Squidward dummy would reappear in the fourth season episode, "Squid Wood".
Things SpongeBob does with the paper include: playing paper paddle-ball, oral-gami (origami with his mouth), using it like a propeller, and playing it like an instrument.
The plot is similar to a Rugrats episode, "No More Cookies," where Angelica tells Tommy to promise not to give her any more cookies, due to her stomach ache, no matter if she begged, pleaded, or cried, but she still wants cookies no matter what. SpongeBob and Squidward do the same with the paper.
The science-related things Squidward mentions (erosion and mitosis) are on the cover of Boring Science Digest: erosion on the back, mitosis on the front under the title. Erosion is when water wears away rock and land; mitosis is when one cell splits into two.
This episode is rare to see on television as it's sister episode (Valentine's Day) both aired on Valentine's Day as Holiday Specials.