Background for Revenue Recognition
Revenue recognition is an accounting process in which tuition and other revenues are regularly transferred from deferred income accounts to earned income accounts. This is necessary to match the income earned with the services provided to the student by the institution.
For additional information on revenue recognition, see the Staff Accounting Bulletin No. 101 (SAB101) on the Securities and Exchange Commission (SEC) site at https://www.sec.gov/. For example, refer to the SEC website to determine how to report upfront fees.
Deferred Revenue
As transaction codes are configured, they can be configured to be:
- Included in revenue recognition
- Defer earnings
For example, tuition (TUIT) can be configured as a deferred revenue transaction. Anthology Student check for these transactions during revenue recognition. Your institution can also link transaction codes to general ledger account numbers.
The revenue recognition routine defers revenue by campus. When a student has deferred revenue for more than one campus, the revenue recognition procedure earns each deferred balance separately.
Earned Revenue
Earned revenue is generated in Anthology Student based on deferred revenue. Typically, a student will earn an amount monthly from the deferred revenue until all deferred amount has been earned. The amount to earn is calculated based on the earnings method configuration in Anthology Student.
How to Earn on Incompletes
Your institution can have an INC SySchoolStatus Code that is assigned to the LOA system status code. Revenue recognition earns on the LOA system status code if the school status code is INC. All other school status codes that are assigned to the LOA system status code do not earn revenue.
Revenue Calculation Details
Your institution configures earnings methods. (Select the Configuration tile > expand Student Accounts > select Earning Methods.) Earnings methods are based on earning units, For example:
- Months
- Weeks
- Calendar days
- Scheduled hours
- Attended hours
- Courses or credits
- Course meeting days
You can also configure Anthology Student to bill by academic year.
Billing methods are set up in conjunction with the earning methods. Each program version has a billing method and earnings method selected.
Anthology Student uses formulas to properly calculate revenue based on earnings units Billing method determines how the revenue is recognized. The earnings scope is determined using the frequency configured for the billing method. (Select the Configuration tile > expand Student Accounts > select Billing Methods.)
The frequencies are:
- Program
- Academic Year
- Term
- Course (frequency to use for earnings is terms and quarters)
- Payment Period
Start Dates for Earnings Periods
The table shows how Anthology Student determines the start date of the earnings period.
| How Earned | Start Date of the Earnings Period |
|---|---|
| Full Program | Actual start date for the enrollment |
| Academic Year | Start date for the academic year |
| Term | Start date for the term |
| Course | Start date for the term where the course is scheduled |
| Payment Period | Start date for the payment period |
| Course Section | Start date of the course section |
Course Section is only available for program versions configured with billing methods with a frequency of payment period and an earning method that uses calendar days.
The revenue calculation is always cumulative for the earnings period. This means that when calculating earned revenue, the calculation determines the total amount that should be earned to date. Then the calculation subtracts the total amount earned before this revenue recognition period. The result is the amount earned for this revenue recognition period.
Anthology Student always writes an earnings record for any revenue ledger that has a balance. If there is an exception, if for any reason the student is not to earn, the calculation writes an earning record (SaRevenueDetail - type 'E') with a zero amount. This is necessary so that if the user cancels the revenue process, Anthology Student can reset the last earn date.
If Your Revenue Basis (Earning Unit) Is Months
You must have configured your billing methods to work in conjunction with your earnings methods. The billing method determines how your revenue is recognized. If your revenue basis (earning unit) is months, the total earning units are the time frame selected for the billing method except credit hours. For example, if you select:
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Term, the total earning units is the time frame in the term
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Program, the total earning units is the time frame in the program
If you select credit hours, the total earning units are the time frame in the term.
Revenue recognition allows for setting parameters on how to earn in the first and last months of the earnings period. These parameters determine if a student earns a full month, half month, or nothing at all in the first and last months of the earnings period.
The revenue recognition and earnings method configuration and calculation allows for earning ½ month of revenue on the first and/or last month of enrollment. You can configure the earnings policy to earn ½ a month in the first and last months using two separate and unrelated days. For example, an institution wants to earn a full month on the first month of enrollment regardless of the day of the month the student starts and earn a full month on the last month of enrollment only if the student ends after the 15th of the month. You can configure the first month as:
You can calculate negative deferred revenue in the month in which it was posted or amortized through the revenue earnings period. You can set this option by selecting the Earn Negative Revenue when you configure transaction codes. (Select the Configuration tile > expand Student Accounts > select Transaction Codes.)
If Your Institution Uses Term Relationships and You Want to Earn by Child Term
On the revenue ledger for a student, Anthology Student calculates the deferred revenue balance for each child revenue record associated with the parent term that is charged on the ledger card and then posts it to the ledger card. Anthology Student:
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Calculates the number of units earned in the period using the child term begin date.
If your institution selected Adjust Earned/Total Units for Holidays when it configured the earning method, reduces the number of units to earn by the number of holiday days that are configured within the child term begin and end dates.
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Tracks revenue header information for the parent term associated with the charge on the ledger card as well. Deferred revenue balances, units to earn, total units earned, and total revenue earned are rolled up from the child term revenue header records up to the parent term revenue header record.
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Calculates the deferred revenue balance allocation for child terms each time the revenue calculation is run.
Selecting a Child Term When Adding an Adjustment
You can select a child term when you add an adjustment to the revenue ledger for a student. (Select the Students tile > select the name in the Students list > expand Student Accounts > select the Revenue Ledger tile.)
When calculating the revenue and a manual adjustment is found for the period being earned, Anthology Student adjusts the deferred revenue amount for the child revenue records. If you need to add an adjustment:
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For a parent term, select the Deferred in the Future list for the earning detail
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For a child term, select the Earned in the Future list for the earning detail
If Your Institution Bills By Academic Year
If an institution bills by academic year, the revenue earnings are isolated by academic year. In the following example:
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The institution has a 2300 hour program (900 hours, 900 hours, and 500 hours).
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The Default Months In Academic Year configured in the academic year definition is 7 months, 7 months, and 3 months (Select the Configuration tile > expand Financial Aid > select Academic Years. )
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The tuition costs are $10,500, $10,500, and $3,900.
The table shows the earnings amounts by academic year and month.
| Academic Year | Month | Total | Earn Amount | Remaining Balance |
|---|---|---|---|---|
| 1 | 1 | 10,500 | 1,500 | 9,000 |
| 1 | 2 | 1,500 | 7,500 | |
| 1 | 3 | 1,500 | 6,000 | |
| 1 | 4 | 1,500 | 4,500 | |
| 1 | 5 | 1,500 | 3,000 | |
| 1 | 6 | 1,500 | 1,500 | |
| 1 | 7 | 1,500 | 0 | |
| 2 | 1 | 10,500 | 1,500 | 9,000 |
| 2 | 2 | 1,500 | 7,500 | |
| 2 | 3 | 1,500 | 6,000 | |
| 2 | 4 | 1,500 | 4,500 | |
| 2 | 5 | 1,500 | 3,000 | |
| 2 | 6 | 1,500 | 1,500 | |
| 2 | 7 | 1,500 | 0 | |
| 3 | 1 | 3,900 | 1,300 | 2,600 |
| 3 | 2 | 1,300 | 1,300 | |
| 3 | 3 | 1,300 | 0 |
Example for Carryover Units for Bill by Academic Year and Earn by Attended Hours
Anthology Student accurately attributes the extra hours attended during one academic year to the revenue units earned in the first month of earning for the next academic year when an institution has a program version configured with the following. (Select the Configuration tile > expand Student Accounts > select Program Versions.)
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To bill by academic year for the billing method
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Earning by attended hours over the billing method or academic year time frame for the earning method
This scenario occurs when the student reaches the hours attended threshold for an academic year as well as extra hours on the same day.
For example, if an academic year consists of 900 hours and on the last day of the academic year the student achieves 901 hours of attendance or more, the hours greater than 900 are assigned to the next academic year. This now enables institutions to report revenue in real time for this configuration.
You can generate a report that shows a list of students who have extra revenue-earning units carried over from one academic year to the next academic year in a given month. Navigate to Reports > Student Accounts > Revenue Earnings-Carryover Units in the legacy interface and follow the standard report generation process to view the report.
The term code for term-based institutions and Months Remaining to Earn for program-based institutions are included in the report produced during the revenue calculation process.
The revenue earnings by program procedure checks the Externship Start Date for the enrollment. (Select the Students tile > select the name in the Students list > expand Academic Records > select the Enrollments tile.) If there is:
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An Externship Start Date, the revenue is earned from the Start Date through the Externship Start Date.
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If there is no Externship Start Date for the enrollment, the revenue is earned through the Graduation Date.
When earning revenue, Standard Period of Non-Enrollment (SPN) students need to earn on the month that they started the SPN. Leave of absences (LOAs) do not earn on the first month of the LOA. If the enrollment status is an SPN status, Anthology Student earns revenue if the month being earned is the same month as the SPN start date. If the month being earned is after the SPN start date, Anthology Student does not earn revenue for the enrollment for the month.
If you cancel the revenue, the Last Earn Date is reset. In the revenue calculation procedure, even if $0 is calculated, a revenue detail record is written. This ensures that the revenue report prints all students with deferred balances.
For future starts, if a student has transferred to or otherwise started another enrollment, Anthology Student uses the start date for the new enrollment if it is after the last earn date.
Depending on the start and end dates of the terms, Anthology Student calculates with a term that is x.5 months long. Some institutions will want to earn only X months of revenue. Your institution can set the Revenue Units field under Terms to override the term length calculation. (Select the Configuration tile > locate Academic Records > select Terms.)
This setting only applies to institutions that bill by term and earn by month. If the total number of credits scheduled for the term that was billed is zero, nothing will be earned. You must update the total number of credits on the revenue header, or register the student for some courses to earn the revenue. This only occurs when earning by Term - Course/Credits.
