Revenue Recognition Overview and Data Setup

Point in Time Revenue Recognition

To implement revenue recognition at a point in time, financial companies must consider when the customer is able to direct the use of the assets and the remaining benefits from these assets.

Point in Time Revenue Recognition is applicable for the following business objects:

• Sales Order
• Sales Schedule
• Service Order
• Maintenance Sales Order
• Project Contract Deliverable

Revenue Recognition - setup

You must specify these data to setup revenue recognition:

• Revenue Recognition Date Based On: It is possible to indicate on what date the revenues must be recognized. To indicate this, Basis Date and a Delay must be specified in the Revenue Recognition Method Dates (cirrc0111m000) session.
• Revenue Contract: When contracts are used, as soon as a revenue document line (which is in fact a sales order line, sales schedule line, service line, maintenance sales line or contract deliverable) is generated, LN tries to find a contract to which this revenue document line can be linked. If such a contract is found, the revenue document line is linked to this contract. If such a contract is not found, a new contract is generated and the revenue document line is linked to this contract. Document lines can only be linked automatically to a contract when the contract status is Open. Note You must select the Use Revenue Contracts check box in the Revenue Recognition Methods (cirrc0110m000) session.
• Revenue Recognition Level: The revenue recognition level indicates at what level recognition must be done. You must define the Revenue Recognition Level in the Revenue Recognition Methods (cirrc0110m000) session.
• Revenue Recognition Rate Based On: With the revenue recognition rate based on, you can indicate which rate date, rate and rate factor must be used for the recognition transactions. You must define the Revenue Recognition Rate Based On in the Revenue Recognition Methods (cirrc0110m000) session.
• Approval Settings: when Use Approval is selected in the Revenue Recognition Parameters (cirrc0100m000) session, you can define Automatic Approve, Automatic Approve Split Lines and Automatic Submit for Approval in the Revenue Recognition Automatic Approval (cirrc0112m000) session.
• Contract settings:
  • The Use Revenue Contracts check box must be selected in the Revenue Recognition Methods (cirrc0110m000) session.
  • You must define the Number Group Revenue Contract and Series Revenue Contract in the Revenue Recognition Methods (cirrc0110m000) session.
  • You must define the Revenue Recognition Level in the Revenue Recognition Methods (cirrc0110m000) session.
• Parameters: This functionality is applicable only if the Point in Time Revenue Recognition check box is selected in the Implemented Software Components (tccom0500m000) session.

  In the Revenue Recognition Parameters (cirrc0100m000) session, following options are available:

  • Log History: History must be logged for the Revenue Contracts, Revenue Document Lines, Revenue Lines and Invoice Lines
  • 1: the search sequence can be defined to find a revenue recognition method.
  • Revenue Contracts Implemented: If this check box is selected, the Revenue Contracts can be used. In that case, also a number group and series can be defined