How is revenue recognized for Grant Billing for Multi-Funded Contracts?
Answer: Grant Billing for Multi-Funded Contracts supports both accrual and modified accrual revenue recognition. For Accrual revenue recognition, Revenue entries are made when the Grant Request for Reimbursement program (GM121) is run in update mode. GM121 will debit the accounts receivable account associated with the grant sponsor (AR Customer) and will debit the grant revenue account assigned to the grant funding source via GM20. GM121 will also post revenue entries for non-grant funds when the grant pay request is generated. GM121 will debit the revenue offset and credit the revenue account assigned to the non-grant funding source via GM20. Balanced entries are posted to General Ledger, while only the revenue entries are posted to Project Accounting. Revenue is posted to the posting level activity where the originating expenditure was posted.
Modified accrual accounting is based on revenues being recognized when they become available and measureable. For Modified Accrual Revenue Recognition, when the grant request for reimbursement is created, GM121 will debit AR and credit deferred revenue. When cash is received and applied, AR195 will debit deferred revenue and credit revenue. Deferred revenue is posted to the contract level activity, and AR will re-classify deferred revenue to revenue and post to the posting level activity that expenditures were allocated.
For Modified Accrual revenue recognition, GM121 will debit AR and credit deferred revenue. AR195 will debit deferred revenue and credit revenue. Deferred revenue is posted to the contract level activity. AR195 will reclassify deferred revenue to revenue and post to posting level activity where expenditures are allocated.
Journal entries for a scenario that tracks General Ledger and Project Accounting transactions through the complete billing process.