Occurrences during revenue processing

The amount of revenue recognized depends on the method you use. Full Accrual, Percentage of Completion, and Completed Contract methods recognize actual costs. Cost Plus recognizes those costs plus any markup, and Milestone recognizes a specified amount for each milestone.

Before you run the revenue recognition routine, you should process transactions on Activity Posting (AC190) to make sure all costs and fees have been calculated and posted. Then you can update accounting unit and resource balances on Accounting Unit Balance Post (AC191) or run Activity Posting (AC190) with the Post Acct Unit Balances field set to Yes. The accounting unit detail is required if you plan to post revenue to the department that recorded the cost.

During the revenue recognition routine, journal entries are made. The application checks to see if billing has occurred and if ceilings are established.

If billing exceeds revenue, then these journal entries are created:

Account	Debit	Credit
Billed/Unearned	XXX,XXX
Revenue		XXX,XXX

If revenue exceeds billing, then these entries are made:

Account	Debit	Credit
Earned/Unbilled	XXX,XXX
Revenue		XXX,XXX

If ceilings exist, then the application looks at ceilings for all levels to determine if any ceilings have exceeded. An amount above the ceiling but within the tolerance amount is considered revenue at risk. Exceeded amounts are recorded using the auto tolerance journal code, if the amount exceeded is equal to or less than the defined tolerance amount. If a tolerance amount is not defined, then the exceeded amount is recorded using the default journal code.

These exceeded amounts are referred to as revenue at risk. When ceiling amounts are raised, journal entries are reversed automatically if an auto tolerance journal code is used. If tolerance is not used, then the journal entries are available to be released.

If ceiling tolerance amounts are exceeded, then the transaction amounts remain unrecognized until either the ceilings or the tolerance amounts have been raised.

You can use the Ignore Rev Ceilings field on the Main tab of Contract Parameters (BR10.1) to allow revenue to be calculated even if revenue ceilings are exceeded. See Use of ceilings in revenue recognition.

See the Project Accounting User Guide.