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Erratum

The Harbus is always concerned about the welfare of its readership and last week the Harbus offered a Free Gift in response to the dissatisfaction of several students with the Finance Department as an entity unto itself. The Free Gift enabled one to claim back money and the text was as follows:
I would like to claim $____ back from my tuition fee which I paid in full at the beginning of the year. If I remember correctly, you should have treated my tuition fee as unearned revenue which you then recognize incrementally as the semesters progress and as you deliver a service and earn the revenue. So could you please return the said amount back to me as the implied contract was not fully executed. Note that in future, unless you change some elements of your attitude, you may want to think about creating an active contingent liability account to make it easier to deal with such requests.

This Editor subsequently ran into his former FRC professor who is an avid reader of the Harbus and expressed joy at seeing his students apply FRC knowledge to real world situations with such ease and alacrity. But, alas, it seems that we made one big blunder. In cases where an entity or organization expects to receive regular claims for money for breaches of service contracts, implied or otherwise, then the entity should not create a `contingent liability’ but instead it should create a `reserve’.

We apologize to all students for this error and any confusion it may have caused, and we apologize to the Finance department in case you had already begun to change your accounting practices as suggested in the original Free Gift.

My esteemed Professor also pointed out that Free Gifts through the Humor section of the Harbus was probably not the best way to communicate effectively with the Finance Department. We have just released the Pigeons this morning.

June 18, 2001
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