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Angela Sharp's profile image
Angela Sharp posted 04-30-2026 01:36 PM

Hello,

We are changing our dining program next fiscal year. Meal plans are moving from a declining balance method to a set number of meals available each week, with Flex cash and meal exchange options.

What is the appropriate accounting treatment, if any, in the following situation:
For our new meal plan, a swipe can be used at other dining outlets with an equivalent value of up to $12 per swipe.  If a student uses a swipe and purchases a value of $8, how is the difference of $4 treated.  The plan does not allow for a "carryover" of the unused value to be used at a later time.
Thank you!
Robert Swanson's profile image
Robert Swanson

You did not indicate the purchase cost to the student. But if the swipes are limited to 10 swipes a week for 10 weeks and the cost is $1,200 then when the student purchases the meal plan at the semester start you have cash db $1,200 and cr Unearned Rev for $1,200. If the student uses 7 swipes a week and as a result forfeits 3 swipes a week, then each time they swiped their card you db Unearned Rev for $12 and cr Sales Revenue for $12. At the end of each week you db Unearned revenue of $36 and cr Forfeiture Revenue of $36 because you earned it through their failure to use the swipes. The posted retail value of each meal, such as $8 for a burger i meaningless in the sense that the student lost a full swipe at that time. 

I guess on an $8 meal you could db Unearned Rev $12 and cr $8 Meal Revenue and $4 to Forfeiture Rev to parse our the two. But ultimately you earned the value of 1 swipe and each swipe carries a value = to the cost of the initial total swipe package / # swipes.

Here is to hoping I'm not missing anything! But that treatment seems to be appropriate. You are really moving from using a dollar denominated retail value to manage the declining value to an alternative valuation of what a swipe is worth.