As many of us transition to our new “normal” under COVID-19, it’s important to stay informed on ways this new strand of coronavirus is impacting both organizations and individuals alike. Below we’ve compiled some of the most frequently asked questions we’ve received in relation to COVID-19.
There’s a lot of information when it comes to COVID-19. We’ve developed a series of resources to help.
Question: We are cancelling an upcoming event due to COVID-19. Rather than refund money to patrons that have already purchased tickets, we would like to issue gift cards or gift certificates for patrons to use at future events. How should this be treated under current revenue recognition standards?
Answer: If you issue a gift card or a gift certificate to be used for a future event or performance rather than refunding the money to the patron, you will recognize a contract liability for the funds that you have already received. You will need to recognize the related revenue when the performance obligation is complete. This would be when the patron uses their gift card or gift certificate.
If you are a nonprofit organization and the patron releases you from the obligation to perform under the contract, you could recognize contribution revenue at that time you are released from the obligation.
Question: Many student activity events and trips are already or likely to be cancelled because of COVID-19. How should districts handle the money that has been collected via fundraisers or deposits?
Answer: First, districts need to work with their travel agency to see if the trip can be refunded if cancelled. If they can get the funds back, here are some considerations:
Additional resource: Guidance Released on Student Activities Impacted by COVID-19
The impact of COVID-19 can be confusing. We’ve compiled some resources to help you make sense of it all.