When does Dermani Medspa recognize revenue from training classes offered to the general public?

According to Dermani Medspa's 2025 Franchise Disclosure Document, the company established a training academy in 2021 to provide continued medical spa training to the general public. Dermani Medspa recognizes revenue from these training classes when the training event occurs. Until the event occurs, any amounts collected are recorded as "Unearned Revenue."

This means that Dermani Medspa uses the accrual method of accounting for its training academy revenue. Under the accrual method, revenue is recognized when it is earned, regardless of when cash is received. In this case, Dermani Medspa earns the revenue when the training class takes place, not when the payment is received. The funds received before the event are considered a liability because Dermani Medspa owes the service until the training is completed.

For a prospective franchisee, this accounting practice is important for understanding Dermani Medspa's financial statements. It provides insight into how the company manages its revenue recognition and ensures compliance with accounting principles. The "Unearned Revenue" account reflects the company's obligations to provide future training services for which it has already received payment.