4.	REVENUE RECOGNITION

Prior to adoption of ASU 2014-09

Revenues are derived primarily from programs taught at our schools. Tuition revenues, textbook sales and one-time fees, such as nonrefundable application fees and course material fees, are recognized on a straight-line basis over the length of the applicable program as the student proceeds through the program, which is the period of time from a student’s start date through his or her graduation date (including internships or externships, if any, occurring prior to graduation), and we complete the performance of teaching the student entitling us to the revenue. Other revenues, such as tool sales and contract training revenues, are recognized as goods are delivered or training completed. On an individual student basis, tuition earned in excess of cash received is recorded as accounts receivable, and cash received in excess of tuition earned is recorded as unearned tuition.

We evaluate whether collectability of revenue is reasonably assured prior to the student commencing a program by attending class and reassess collectability of tuition and fees when a student withdraws from a course. We calculate the amount to be returned under Title IV Programs and its stated refund policy to determine eligible charges and, if there is a balance due from the student after this calculation, we expect payment from the student. We have a process to pursue uncollected accounts whereby, based upon the student’s financial means and ability to pay, a payment plan is established with the student to ensure that collectability is reasonable. We continuously monitor our historical collections to identify potential trends that may impact our determination that collectability of receivables for withdrawn students is realizable. If a student withdraws from a program prior to a specified date, any paid but unearned tuition is refunded. Refunds are calculated and paid in accordance with federal, state and accrediting agency standards. Generally, the amount to be refunded to a student is calculated based upon the period of time the student has attended classes and the amount of tuition and fees paid by the student as of his or her withdrawal date. These refunds typically reduce deferred tuition revenue and cash on our consolidated balance sheets as we generally do not recognize tuition revenue in our consolidated statements of income (loss) until the related refund provisions have lapsed. Based on the application of our refund policies, we may be entitled to incremental revenue on the day the student withdraws from one of our schools. We record revenue for students who withdraw from one of our schools when payment is received because collectability on an individual student basis is not reasonably assured.

After adoption of ASU 2014-09

On January 1, 2018, we adopted the new standard on revenue recognition, ASU 2014-09, using the modified retrospective approach of ASU 2016-10. The adoption of the guidance in ASU 2014-09 as amended by ASU 2016-10 did not have a material impact on the measurement or recognition of revenue in any prior or current reporting periods and there was no adjustment to retained earnings. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to students in an amount that reflects the consideration to which the company expects to be entitled in exchange for such goods or services. Substantially all of our revenues are considered to be revenues from contracts with students. The related accounts receivable balances are recorded in our balance sheets as student accounts receivable. We do not have significant revenue recognized from performance obligations that were satisfied in prior periods, and we do not have any transaction price allocated to unsatisfied performance obligations other than in our unearned tuition. We record revenue for students who withdraw from our schools only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Unearned tuition represents contract liabilities primarily related to our tuition revenue. We have elected not to provide disclosure about transaction prices allocated to unsatisfied performance obligations if contract durations are less than one-year, or if we have the right to consideration from a student in an amount that corresponds directly with the value provided to the student for performance obligations completed to date. We have assessed the costs incurred to obtain a contract with a student and determined them to be immaterial.

Unearned tuition in the amount of $23.4 million and $22.5 million is recorded in the current liabilities section of the accompanying condensed consolidated balance sheets as of December 31, 2019 and 2018, respectively. The change in this contract liability balance during the year ended December 31, 2019 is the result of payments received in advance of satisfying performance obligations, offset by revenue recognized during that period. Revenue recognized for the year ended December 31, 2019 that was included in the contract liability balance at the beginning of the year was $21.7 million.

The following table depicts the timing of revenue recognition:

	Year ended December 31, 2019
	Transportation and Skilled Trades Segment		Healthcare and Other Professions Segment		Transitional Segment		Consolidated
Timing of Revenue Recognition
Services transferred at a point in time	$	11,881	$	4,521	$	-	$	16,402
Services transferred over time		181,841		75,099		-		256,940
Total revenues	$	193,722	$	79,620	$	-	$	273,342

	Year ended December 31, 2018
	Transportation and Skilled Trades Segment		Healthcare and Other Professions Segment		Transitional Segment		Consolidated
Timing of Revenue Recognition
Services transferred at a point in time	$	10,351	$	3,834	$	72	$	14,257
Services transferred over time		174,912		68,301		5,730		248,943
Total revenues	$	185,263	$	72,135	$	5,802	$	263,200

	Year ended December 31, 2017
	Transportation and Skilled Trades Segment		Healthcare and Other Professions Segment		Transitional Segment		Consolidated
Timing of Revenue Recognition
Services transferred at a point in time	$	8,987	$	2,860	$	28	$	11,875
Services transferred over time		172,341		60,781		16,856		249,978
Total revenues	$	181,328	$	63,641	$	16,884	$	261,853