H2O Kindness: A Not-For-Profit Revenue Recognition Case

• In Event: Roundtable Papers

Abstract

This instructional case focuses on revenue recognition in a not-for-profit setting. The primary objective of this case is to develop students’ understanding of the unique revenue recognition issues present in the not-for-profit industry. Students must use relevant standards, including recently issued ASU 2018-08 Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made and Codification topic 606 Revenue from Contracts with Customers to recognize relevant issues and to correctly record revenue. Specifically, students are required to distinguish between exchange and non-exchange revenue, between conditional and unconditional non-exchange revenue, and between revenues with restrictions and revenues without restrictions. Students must then use Codification topics 606 and 958 to correctly record exchange and non-exchange revenues, respectively. Finally, students are required to write a memo to a non-accounting not-for-profit professional describing revenue recognition requirements. I expect this case to be most applicable in undergraduate or graduate courses that discuss not-for-profit accounting such as Government and Not-for-Profit, Advanced Accounting, and Intermediate Accounting.

Author

• Dana Garner, Virginia Tech