How should schools record the return of unused grant monies and interest earned in excess of $100?
Amounts received from federal or state sources that will require reversion if not spent should be recorded as cash and unearned revenues upon receipt, and later recognized as revenue simultaneously with the recognition of the expense. Upon the actual reversion of any unexpended portion of these monies, schools should reverse the initial entry for the amount reverted. (Alternatively, schools may choose to record such grants as revenues upon receipt, then at year-end reclassify the unspent portion from revenue to unearned revenue.) When interest in excess of $100 per grant is received, the excess portion should be recorded as a liability. The liability should be reversed when interest in excess of $100 is reverted.
