Revenue recognition

Purpose

The purpose of this policy is to establish guidelines for determining whether a transaction creates revenue for Lynn University under Generally Accepted Accounting Principles.

Policy

Lynn University revenues are recognized based on accrual accounting in accordance with Generally Accepted Accounting Principles (GAAP). This policy applies to all transactions conducted in the ordinary course of business of Lynn University.

Definitions

See Definitions set forth in the Procedures/Guidelines section below.

Procedures/Guidelines

The following guidelines are provided to assist in the determination of whether a transaction creates revenue for Lynn University under Generally Accepted Accounting Principles.

I. Definition of Revenue

Lynn University utilizes the definition of revenue from paragraph 78 of the FASB Statement of Financial Accounting Concepts No. 6, “inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services or other activities that constitute the entity’s ongoing major or central operations.”

II. Tuition and Fees

Lynn University recognizes revenue from tuition and fees when earned (i.e., when classes begin) rather than when paid. Tuition and fees are recorded in the terms for which they relate. Deposits and prepayments of tuition and fees are recorded as deferred until the start of the term for which they are intended. Tuition is recorded in the financial statements net of discounts for scholarships.

III. Contribution Revenue

Contributions are recorded when the money is received. All contributions are available for unrestricted use unless specifically restricted by the donors. Conditional promises to give are not included as support until the conditions on which they depend are substantially met.

The University reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a stipulated time restriction ends or purpose restriction is accomplished, the donor restriction expires. Temporarily restricted net assets are then released to unrestricted net assets and reported in the statement of activities as net assets released from restrictions.

Gifts of cash or other assets that must be used to acquire long-lived assets are reported as restricted support. When there are no explicit donor stipulations about how long those long-lived assets must be maintained, the University reports expirations of donor restrictions when the acquired long-lived assets are placed in service. Naming conditions typically associated with long-lived assets are deemed to be satisfied when the University demonstrates both the ability and intent to comply with those conditions.

IV. Investment Revenue Definition

Lynn University carries securities with readily determinable fair values and debt securities at fair market value. Only limited partnerships and other investments whose market value is not readily discernible are carried at the lower of cost or fair value. Lynn University recognizes as unrealized gains (losses) the increases and decreases related to market changes. Lynn University further records investment income as interest, dividends, rents, royalties and similar payments when earned. Lynn University records investment management fees as contra revenue, reducing the investment income.

V. Changes in the Value of Split-Interest Agreements

Split Interest arrangements, in which Lynn University receives benefits shared with other beneficiaries, are recorded at fair value when the executed gift document is received. Irrevocable split-interest agreements are recorded as intentions to give (pledges). Future distributions under split interest agreements are recorded at the present value of those estimated future distributions.

VI. Exclusions from Revenue

Lynn University does not include as revenue:

  1. Reimbursements of expenses such as an employee paying for a personal telephone call made from Lynn University in an emergency or repayment of a travel advance.
  2. Funds received on behalf of others (true agency funds) for which Lynn University is acting on behalf of the other entity and ownership of the funds remains with the other entity. The determination of a true agency relationship shall be made by the Vice President for Business and Finance based on discretion as to the use of the funds.


To learn more about this policy or the supporting procedures, please contact Finance.

Policy updated on: Oct. 24, 2018