Custom Revenue Accounting Method

Question

Hi All,
My client has a unique revenue recognition requirement. Basically they want an additional account "Deferred Rev Unbilled" for tracking the potential revenue from a project.
If anyone has come across this scenario, please share over this thread.
See the cases below:
Month 1, $100 deal done % of complete, 50% invoiced up front, 50% on completion                    
*******************************************************Dr*******Cr      
Total Deal value***************Deferred Revenue------------------------------100
Invoiced (First milestone)********Accounts Receivable--------------50      
Unbilled Deferred Rev***********Deferred Revenue unbilled------50      
Normally, what Projects does is:
*******************************************************Dr*******Cr      
Invoiced (First milestone)********Accounts Receivable--------------50      
Deferred Rev*****************     Deferred Revenue------------------------------50
Month 2, $75 recognized in revenue, no additional invoicing.
*******************************************************Dr*******Cr
% complete revenue***********Revenue-------------------------------------------75
Deferred Revenue (total deal)****Deferred revenue------------------75      
Amount recog past invoicing*****Unbilled AR---------------------------25      
Unbilled Deferred Rev**********Deferred Revenue unbilled--------------------25
What Project does is:
*******************************************************Dr*******Cr
***************************Event Revenue----------------------------------75
***************************Unbilled AR---------------------------25
***************************Unearned Rev-----------------------50
Month 3, $25 recognized in revenue, $50 invoiced
*******************************************************Dr*******Cr
% complete revenue**********Revenue--------------------------------------------25
Deferred Revenue (total deal)***Deferred revenue-------------------25      
Total Deal value**************Deferred Revenue-------------------------------50
Invoiced (Second milestone)****Accounts Receivable----------------50      
Amount recog past invoicing****Unbilled AR-----------------------------------------25
Unbilled Deferred Rev*********Deferred Revenue unbilled---------25      
What project does:
For Revenue:
*******************************************************Dr*******Cr
**************************Event Revenue------------------------------------25
**************************Unearned Rev---------------------------25
For Invoicing:
**************************Receivables-------------------------------50
**************************Unbilled AR-------------------------------------------25
**************************Deferred Revenue---------------------------------25
Thanks
SJ

Answer 1

Hi
Since the accounting you need are not supported by standard functionality, I may suggest a solution based on generation of pair of events, different event types, which are offsetting each other.
Set up several event types, each will credit a specific account. You will need to setup revenue AA rules based on lookup set that map event type to account.
For the functions of UBR and UER you may set up the same constant account, since we will not be affected by it.
See the following list of event types:
Event type Funding --->> Deferred Revenue
Event type After invoice --->> Deferred Revenue unbilled
Event type Revenue --->> Revenue
Event type --->> Unbilled AR
When you allocate fund for the project generate draft revenue creating an event of type Funding, which will -
Credit 100 @ Deferred Revenue, debit Constant.
Generate an invoice for 50
Credit 50 @ constant and Debit AR
generate revenue after invoicing for -50.
Credit -50 @Deferred Revenue unbilled, and debit -50 @ Constant
Month 2, generate revenue for 75, and on the same time add three events of different event types for -75, 25, -25.
credit 75 @ revenue, and debit Constant
credit -75 @ Deferred Revenue, and debit Constant.
Credit 25 @ Deferred Revenue Unbilled, and debit Constant
Credit -25 @ Unbilled AR, and debit constant.
You will need to develop billing extension that will generate the events of the proper type, and proper amounts.
Hope you can go on with that example....
Dina