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Revenue Recognition


West Virginia University Policy
Division of Administration and Finance

Policy Number: IARA-08

General Information

Reason For This Procedure:

  • To provide general principles and guidelines for the proper accounting of West Virginia University’s operating and non-operating revenues.  

To Whom Does This Procedure Apply:  

  • This Procedure applies to all West Virginia University departments, including those on the regional campuses - Potomac State College of WVU, WVU Institute of Technology, Charleston division of the Robert C. Byrd Health Sciences Center, Jackson’s Mill State 4-H Conference Center and Camp, and the WVU Farms - and the West Virginia University Research Corporation.


Revenues are inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both), that are applicable to the current reporting period, from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations.


Revenue Recognition

  • Revenues are recognized based on accrual accounting in accordance with generally accepted accounting principles (GAAP). Revenues are recognized when earned, regardless of the timing of cash receipts. Revenue is considered earned when the University has substantially met its obligation to be entitled to the benefits represented by the revenue. Deposits, advance payments and progress payments for programs or activities to be conducted primarily in the next fiscal year are classified as unearned revenues and are recognized as revenue only when the revenue producing event has occurred.
Types of Revenue – Revenues are classified as either operating or non-operating. Operating revenues include:

1)      Student Tuition & Fees - The University recognizes revenue from student tuition & fees when earned rather than when paid. Deposits and prepayments of tuition and fees are recorded as unearned revenue until the start of the period for which they are intended. Tuition is recorded in the financial statements net of discounts and scholarships.

2)      Sales & Services of Auxiliary Enterprises - Auxiliary enterprises are departments organized specifically to provide goods and services to students, faculty and staff at a fee directly related to the cost of the goods and services provided. Examples include Intercollegiate Athletics department and Housing & Dining services. Auxiliary revenues are recognized when earned. Such revenues are recorded net of scholarship allowances and discounts.  Prepayments of football tickets, orientation fees, and room and board are recorded as unearned revenue.

3)      Grants & Contracts - A large number of the University’s federal, state, local and nongovernmental grants and contracts are “reimbursement-type” or “expenditure-driven” (i.e., expenditures are the prime factor for generating revenue). In these sponsored agreements, revenue is recognized to the amount of expenditures. Advance payments on sponsored awards are recorded as unearned revenue until an expenditure is incurred or another measurable factor is achieved. Facilities and Administrative expenses associated with research or other activity are also recognized as the expenses for the activity are incurred.

4)      Federal Land Grants - The University receives appropriations from federal agencies for agricultural and forestry research, state agricultural experiment stations and for extension services. Such revenue is classified as restricted operating revenue and is recognized to the amount of expenditures.

5)      Sales & Services of Educational Departments - Certain University activities which relate incidentally to instruction and research generate revenues in their normal course of business. These activities are recorded as sales and services of educational departments. Revenue is recognized when earned, i.e., when goods are delivered or services are rendered.

6)      Other Operating Revenues - Other revenues not classified in any of the other categories are recorded as other operating revenues. These include revenue from leasing of the University’s academic bookstores and retail stores. Such revenue is also recognized when earned.

Nonoperating revenues include –

1)      State Appropriations - Appropriation of state general revenue is made directly to the University through the annual budget digest. The University receives these resources in accordance with a quarterly allotment schedule established by the State Budget Office. The University recognizes revenue as such allotments are received.

2)      Gifts - Monetary gifts are recorded as gift revenue when received. Noncash gifts or gifts-in-kind are recorded as either capital gift revenue or gift revenue at the estimated fair market value as of the date of the gift.

3)      Investment Income - Investments are presented at fair value, based on quoted market values. The University recognizes as unrealized gains or losses the increases and decreases related to market activity. The University further records investment income as interest, dividends and similar payments when earned. Loss on investments is classified as contra revenue, reducing the investment income.

4)      Payments on Behalf of the University - Fringe benefits for employees of the University paid on behalf of the University by the State of West Virginia or the WVU Foundation are recorded as payments on behalf when payments are made.


Procedure Development

  • The responsibility for procedure development of this procedure rests with Institutional Accounting, Reporting and Analysis.


  • The responsibility for implementation of this procedure rests with Institutional Accounting, Reporting and Analysis.


  • The responsibility for interpretation of this procedure rests with Institutional Accounting, Reporting and Analysis.


  • Additional information or questions regarding this procedure can be obtained by contacting Institutional Accounting, Reporting and Analysis at 304.293.4008.

Related Documents

Originally Issued: July 1, 2010
: February 8, 2016
Approved by:
Daniel A. Durbin, Senior Associate Vice President for Finance