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Compare how tuition and fees should be recorded for colleges and universities according to FASB and GASB standards?
Compare how tuition and fees should be recorded for colleges and universities according to FASB and GASB standards?
Expert Solution
- Both FASB and GASB standards require that gross tuition and fees be recorded as revenue even if some of the revenue will be offset by tuition waivers, scholarships, and fellowships.
- Discount and allowance accounts recognize offsets to tuition and fees.
- Tuition refunds are charged against the Tuition and Fees revenue account.
- Tuition waivers received as a part of compensation should be recorded as a compensation expense.
- Tuition and fees received can be recorded as deferred revenue if they are not considered earned when received.
- Tuition and fees are sometimes paid in advance, and can be received in one year for classes to be held the following year. Determination of when the tuition and fees should be recorded as revenue depends on when those revenues are deemed “earned.”
- According to FASB - Private colleges and universities should show tuition and fees net of any estimated uncollectible amounts, directly adjusting the revenue account for the estimate.
- According to GASB - Public colleges and universities use a contra revenue account, like Provision for Bad Debts.
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