|Posted: 30 Sep 2010 at 02:08 | IP Logged
Ok, please help me understand what gives between the two questions below. One is from Becker, the other is from Gleim. (I have used Gleim for studying but I am doing Becker's Final Review). I don't understand why the Becker answer isn't $4M.
Nadaf received $4M in tuition revenue for the year ended Dec 31, X1. In addition to the tuition received, the university offered $500,000 in scholarships but had to refund $200,000 for cancelled classes. For the year ended December 31, 20X1, Nadaf would record gross revenue for tuition of:
Gross Revenue is computed as:
Ames assessed it students $3M for tuition and fees. The net amount realized was only $2.5M because scholarships of 400K were granted to students and tuition remissions of 100K were allowed to faculty members. These amounts were properly classified as expenses. What should Ames report for the period as revenue for tuition and fees?
B) 3M- given that scholarships and tuition remissions were expenses, revenue should be reported at gross.