Revenue recognition with partial credits

Hello,
We have an issue regarding recognising revenue on contracts where a partial credit has been raised.
Example:
Assume a 2 year contract, £2,400 (£1,200 year 1, £1,200 year 2)
The first year is billed and paid in full and then in the second year a credit is issued for £1,200
When the credit happens revenue makes a correction based on the contract value including the credit. In the first year we recognise £100 per month.  At the end of year 1 we have recognised £1,200.
However when the credit is issued SAP makes a correction and it now takes £1,200 as being the contract value and splits this over 24 months.  It removes anything we have previously recognised and now recognises £50 a month.  As the first year was billed and paid this revenue should not be corrected regardless of what happens in year two.
Also when the correction happens, instead of placing the unrecognised revenue in the deferred account it place's this in the unbilled revenue.
Would this problem be resolved if we used revenue distribution type 'c' which distributes revenue based on the individual billing plan years.
And,
Why does the unrecognised revenue go into the unbilled account ?
Any thoughts or advice would be very useful.
Many Thanks,
Matt

Please check the amount and the start of accrual period and end of accrual period. It should be for one year and not two if you want to apply 1200 over one year. If the accrual period is two years then obviously the accrued amount is going to be 50. Conversely if the accrued period is two years then the amount should be 2400 and not 1200.
regds
Jude

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    It may happen that in revenue recog item categories fields may greyed out but you have to get authorization for your id from a basis guy.
    :The point at which revenue (income) is credited to a revenue account in General Ledger. There are three possible types
    Time-based : Revenue is recognized in equal proportions between specific start and end dates based on the number of posting periods defined at the company level. Revenue recognition for time-based documents can occur before, during, or after the invoice process.
    Performance-based : Revenue is recognized based on the occurrence of certain events such as goods issue or the performance of a service. Revenue recognition for performance-based documents can occur before, during, or after the invoice process.
    Standard : Revenue is recognized at time of invoice:
    The specified item was not found.
    Re: Revenue Recognition
    CONTRACTS
    Lets take standard CQ contract type:
    First maintain customer - material info record in VD51 T-code
    Secondly maintain pricing for customer / material or only material combination in VK31 / VK11 T-code
    Then use VA41 T-code to create a contract
    VA42 to change contract
    VA43 to display / view contract
    In VA41, enter the document type CQ, followed by the sales area details,
    Enter Sold to party.
    Enter PO number
    Enter PO Date
    Enter Validitiy from Date
    Enter Validity to Date
    Enter Material
    Enter Quantity say 999,999,999 or any other higher quantity as it is referred again and agaain
    Hit Enter.
    Save.
    regards
    balajia

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