Revenue Recognition Appendix A - Quick Reference Guide

Accounts Receivable Deferred Revenue Nonrefundable Deposits Refundable Deposit

When is it When Harvard ships goods or When the customer pays BEFORE When the customer pays a When the customer pays a needed? performs services BEFORE the Harvard ships goods or performs nonrefundable deposit on refundable deposit (like a security customer pays for them, services and Harvard won’t provide goods or services BEFORE deposit on a lease) that will be Harvard recognizes the revenue the goods/service until the next Harvard provides them, returned to the customer at the and records an ACCOUNT quarter, Harvard records a Harvard records a DEFERRED end of the lease or other RECEIVABLE asset DEFERRED REVENUE liability until it REVENUE liability until it agreement, Harvard records a actually ships the goods or actually ships the goods or DEPOSIT liability until the end of performs the services performs the services. the related lease or other agreement.

How do I record Process a journal entry: Deposit check/cash on a credit Deposit check/cash on a credit Deposit check/cash on a credit it? DEBIT other accounts receivable voucher: voucher: voucher: asset (0130-0299) DEBIT cash 0010* DEBIT cash 0010* DEBIT cash 0010* CREDIT revenue (4000-5899) CREDIT deferred revenue liability CREDIT deferred revenue CREDIT deposit liability (2480- (2600-2613) liability (2480-2599) 2599) When do I reverse Reverse/reduce the account Reverse the deferred revenue Reverse the deferred revenue Reverse the deposit liability when the original entry? receivable when Harvard liability and recognize the revenue liability and recognize the the deposit is returned to the receives the customer payment. when Harvard ships goods or revenue when Harvard ships customer, generally at the end of performs services. the goods or performs the the lease or other agreement. services. What is the DEBIT cash 0010* DEBIT deferred revenue liability DEBIT deferred revenue liability DEBIT deposit liability (2480-2599) reversal entry? CREDIT accounts receivable (2600-2613) (2480-2599) CREDIT cash 0010* asset (0130-0299) CREDIT revenue (4000-5899) CREDIT revenue (4000-5899) Examples Rent, trademark revenues: • Subscription revenues paid in • Admission deposits: defer Security or other lease-related record as revenue when service advance: defer based on months until students begin classes, deposits: record as liability until performed, reduce receivable subscription provided versus then recognize the revenue lease term ends and amount is when customer payment is total months in subscription • Advance deposits for returned to customer received period, recognize revenue events/functions: defer until monthly event/function takes place, • Advance ticket sales: defer until then recognize the revenue event takes place, then recognize the revenue

*Object code 0010 “Cash” is debited on the Central Bank’s balance sheet and a due to/from entry is created crediting object code 0375 “CO^Due to/from Tub” on the Central Bank’s balance sheet and debiting object code 0375 on the appropriate tub’s balance sheet.

Revenue Recognition – Appendix A Page 1 of 1