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November 2024

Accounting for Coaching Fees

By Dolphy D’souza, Chartered Accountant
Reading Time 13 mins

Educational institutions receive fees from students for an entire financial year, though the coaching is imparted over an academic year, which may be shorter, let’s say, 10 months, followed by a two-month vacation. An interesting question arises, whether the student fees are recognised equally over 10 months or 12 months. It appears there are mixed practices on how the fees are recognised. Whilst the fact pattern discussed herein relates to coaching or tuition fees, similar question arises in numerous other service industries, for example, sports and broadcasting services or provision of maintenance services in IT and construction industries. Both the views are discussed herein, followed by author’s view on the more appropriate view.

QUERY

With respect to an educational institution:

(a) Students attend the educational institution  for approximately 10 months of the year (academic  year) and have a summer break of approximately two months;

(b) During the summer break, the school’s academic staff take a four-week holiday and use the rest of the time:

(i) to wrap-up the school year just ended (for example, marking tests and issuing certificates); and

(ii) to prepare for the next school ye

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