NACUBO Issues Guidance on Tuition Revenue Recognition
2/13/2019
NACUBO has issued Accounting Advisory 19-01, FASB ASC 606, Revenue From Contracts with Customers: Tuition Revenue. The advisory uses tuition to illustrate concepts in Accounting Standards Codification (ASC) Topic 606 and asserts that a student’s signed financial responsibility agreement (or similar contract) entitles an institution to consideration, in exchange for promised services, on the payment due date. Consequently, an institution has a receivable for promised services on the date that payment is due on signed contractual agreements with students.
The advisory explains new terms and requirements such as:
- Performance obligations.
- Transaction price.
- Consideration payable to a customer (student financial aid).
- Variable consideration.
- Contract assets.
- Contract liabilities.
- Portfolio approach.
- Receivable recognition.
The advisory also provides detailed accounting examples and addresses financial statement disclosures.
