Revenue Recognition method

The basis of revenue recognition per period is by the number of days per fiscal period. The number of days the contract is live in the fiscal period determines the amount that needs to be recognized for that fiscal period. The contract duration in days, based on the start date and end date of the contract, forms the basis of the contract price per day. The following formulas are used:

amount to be recognized = (net contract amount / total days of contract) * number of days	contract or configuration belong to the fiscal	period

net contract amount = (total contract sales amount) * (100 – p)%

Where 'p' is the percentage specified in the Provision field of the contract header. If 'p' is zero, the net contract amount is the current total contract sales amount.

The number of days elapsed since the last recognition for the contract forms the basis to calculate the amount to be recognized. The creation date of the contract revenue is considered and the fiscal period to which the creation date belongs will be the fiscal period in which the amount will be recognized. The following formulas are used:

amount to be recognized = ((net contract amount / total days of contract * cumulative number of days to date) – cumulative recognized revenue until date)

net contract amount = (total contract sales amount) * (100 – p)%

Where 'p' is the percentage specified in the Provision field of the contract header.

When from Service Order Control, Call Management or Maintenance Sales Control, the material, labor and other lines are costed, the cost incurred for the contract is transferred to Contract Management and stored against the fiscal period in which the costing occurred. The following formulas are used:

ERF = total contract sales amount/ total estimated costs amount to be recognized = (cost incurred for the period * ERF)

net contract amount = (total contract sales amount) * (100 – p)%

net	configuration amount = (total configuration sales amount) * (100 – p)%

The cost incurred since the last recognition for the contract forms the basis to calculate the amount to be recognized. The creation date of the contract revenue is considered, and the fiscal period to which the creation date belongs, will be the fiscal period in which the amount will be recognized. The following formulas are used:

ERF = total contract sales amount/ total estimated costs amount to be recognized = (lesser of A or B) – cumulative recognized revenue until date

A = cumulative cost incurred to date * ERF

B = net contract amount

net contract amount = (total contract sales amount) * (100 – p)%

If recognition is at the configuration level:

ERF = contract configuration	sales amount / estimated costs for configuration amount to be recognized = (lesser of A or B) – cumulative recognized revenue until date

A = cumulative cost incurred to date * ERF

B = net contract configuration amount

net contract configuration amount = (total contract configuration sales amount) * (100 – p)%