GAAP Invoicing and Revenue Recognition EITF 00-21

Does anyone out there have any experience with GAAP invoice and revenue recognition rule EITF 00-21, dealing with Multiple Element Arrangements?
This is the scenario where a contract or sales orders includes support or service that is packaged with a product, therefore customer sees its price as $0; however, when is comes to revenue recognition, vendor needs to account for the revenue according to the typical price for the support or service and percentage of the total contract or sales order.
This would be something that is imlpemented in Advance Pricing, Order Management and AR.
Thanks!!

Similar Messages

  • Data Migration of Contracts with periodic billing and revenue recognition

    Hello Experts,
    I am trying to develop a legacy data migration plan for Contracts with periodic billing plan and revenue recognition.
    Example of the scenario is given below:
    Customer signed a contract for one year starting 01/01/2009.
    Customer is billed quartely, billed in advance.
    SAP going live on 04/01/2009
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    Thanks  A Lot
    Anil
    Edited by: Anil  Jose on Sep 17, 2008 9:38 PM

    Hi Anil
    How did you manage this? We also had the same problem in one of our contracts and what we did was that we copied the contracts from the legacy with the full value. That is suppose SAP went live on 1st April, 2009 and the contract was created on 1st January 2009 for a value of suppose 100 USD, with the first billing being done on 1st Jan for 33.33 USD for 4 months. We first created the contract with a validity from 1st Jan 2009 in the new system. We billed it with a billing type that we created that did not actually create new accounting entries as the accounting entries had already been created in the legacy system. In the new system then we recognised the revenue till the go live, so that the actual value remaining of the contract reduced. Then we started the billing plan of the contract from 1st of April 2009 for the remaining amount. So next invoice was created on 1st april for 33.33 USD. Can you share your solution.
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  • Sales Order Progress Billing and Revenue Recognition

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    Revenue Recognition
    Jan 06 $20000
    Feb 06 $30000
    Mar 06 $40000
    Apr 06 $10000

    Hi
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  • Revenue recognition job hangs and needs reboot of servers

    We are on SAP BPC v7.0 SP6.1, using Microsoft Office 2007 and Internet Explorer 7.  We have two environments - Production and QA.  Production so far is running fine; QA is on a smaller environment. 
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    Hi Sorin Radulescu,
    I load the initial billing file using the Import logic script and select the data file and transformation file.  I click on the Merge data values option; click No to run default logic; and click No, do not check work status settings.  Once the import completes, I run the revenue recognition logic for the accounts and periods I am working with.
    I compared our Production transformation file, default logic script (which I am not running), and revenue recognition logic script to QA and they both match.  My problem is when I run the exact same revenue recognition job in QA, the job just sits in running status but should finish in a couple of minutes.  I would let it run for a couple of hours in QA, then terminate the job and have our two servers rebooted, then the same revenue recognition job runs to completion within a couple of minutes.
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    I will let our DBA know about monitoring the dllhost.exe for amount of memory used.  But the last time he tried to check for any activity on the database he could not see anything, but I do not know if he was checking dllhost.exe or some other files.
    Thanks for your response and suggestions.  Since this is our QA environment (which I try to keep current with Production), I am trying to see if I can identify the cause and fix it, in case it carryover to our Production environment.
    Regards,
    Bucky

  • HELP: AR Open Invoices Conversion with Revenue Recognition (Daily Revenue)

    Hi,
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    I am developing Functional Specification Document (CV.040); Need to understand the Assumptions, Approach and Which data needs to be extracted from Legacy System.
    Appreciate your reply at the earliest
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    Anil,
    Thanks for your response, Here are the answers to your questions.
    1) The invoices that you want to convert - Do they already have revenue recognition on them?
    Ans: Yes they have Revenue Recognition On Them.
    2) Are you bringing only Open Invoices? What about Invoices that are closed (paid), but still have unrecognized revenue on them? DO you want to bring them
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    b) Invoice is Partially Paid (REC is Partial) and Unearned is Partial, Revenue is partial
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    d) We do not want to bring the invoices with Fully Paid and Fully Recognized, Unearned is Zero
    3) What about partially paid invoices? How do you want to bring them in?
    Ans: See above scenarios.
    4) Do you want to bring in all Invoice details,or just bring in a summary line with the outstanding amount?
    we assume only Summary, but if the Invoices with Several Lines and Different Accounting Rules, We may have to bring them too
    Appreciate your response; Suggest some possibilties?
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  • Posting taxes and revenue account seperately in invoice

    Dear Team,
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    Thanks and regards,
    Suhas

    it applies to only few materials on a sales order as items
        and with only 1 specific item category
    This should have been posted in sales forum.
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    thanks
    G. Lakshmipathi

  • Revenue Recognition Tied to Invoice

    Hi All,
    We have a following requirement to meet for our revenue recognition process. I would like to know if it is possible to achieve in version 11.5.10.2.
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    1. Is this functionality/requirement possible to achieve in 11i ? with or without customization? if with customization, please provide details on what API/package/process/setups to be customized?
    2. Is this functionality/requirement already available in R12? partially achievable or completely achievable?
    Any suggestions/inputs will greatly help us.
    Thanks.
    Abm

    Hi Abm,
    You have rightly mentioned in your first note that the revenue recognition is tied to the Invoice. At given time, the amount of revenue recognized on an invoice is always less than or equal to the Invoice Amount. So, in order to recognize the revenue, you need to have an invoice.
    You have mentioned in your previous note that you may generate one or multiple invoices in a year and no mater how many invoices you generate, you still want to recognize 8333.33 (i.e. 300,000/36) each month. As per standard functionality, this is not possible. Reason - Revenue Recognition is based on the Invoice and the Invoice amount. Your requirement actually gives rise to another question. If you havent invoiced the customer in the first month, what will be the accounting entry for the revenue recognition of $8333.33?
    I can think of some workable solution, but first I need to understand the accounting for this.
    Thanks,
    Anil

  • Revenue recognition and error message" Missing data: Provision account Message no. VU019

    Hi,
    I have configured revenue recognition type "B" for my item categories and I am using BOMs where pricing is set at item level. The issue is that when I have more than one components in my BOM then I get an error message (Missing data: Provision account Message no. VU019) at the time of saving sales order though I have configured the provision account. However If I enter the same component/material in the sales order without BOM which will have same pricing data then it does not through the above error message. Please help what could be the potential issue.
    Best Regards
    Javed

    Have you checked the Analysis from condition tab once you created a BOM?  If so, what is the message you could see for pricing.
    G. Lakshmipathi

  • Accrual run and  revenue recog( time related revenue recognition)

    Hi All,
    Please let me know  what are the configuration steps required to  perform accrual run and  revenue recog( time related revenue recognition)  in R/3 when we do billing in CRM , for service contracts  with start date and end date  and billing plan - quarterly in advance
    Required scenario:
    Contract creation  in Crm
    Billing in CRM
    Accrual Run in R/3
    Revenue Recognition in R/3
    can  we  do with the help of result analysis key and internal order .
    Your valuable reply  awaited
    thanks
    SK
    Moderator: Thread locked due to cross posting.

    Hi
    Please refer the below mentioned link
    http://fuller.mit.edu/sb_support/media_lab/deferred_revenue_recog.htm
    http://sap.ittoolbox.com/groups/technical-functional/sap-log-sd/intercompany-revenue-recognition-process-3042637
    It may help you
    Regards
    Praveen P C
    Edited by: Praveen Chirakkel on May 18, 2011 9:13 AM

  • Revenue Recognition in Russia

    Hi,
    we are rolling out our global SAP solution for Russia and I would like some valuable inputs from SAP Gurus to my query.
    My query is regarding revenue recognition in Russia. According to local GAAP, unless a signed copy of the TORG-12 (Act of acceptance of the transfer of goods) is received from the customer, it cannot be considered as revenue for accounting purposes in Russia, whereas for US GAAP purposes revenue can be recognized once the goods have been delivered.
    US GAAP is the leading ledger and Russian GAAP is the non leading ledger but it is not possible to release billing to accounting for the leading ledger only.
    Another point to note is that Russian accounting is based on actuals and no accruals can be posted for revenues.
    Pls. can someone provide me some insight as to how these two requirements were handled together in their projects within SAP.
    We are on SAP ECC version 6 ehp4.
    Thanks in advance for all your help.
    Regards,
    Nitin

    Dear Deepu,
    The Concept of "Revenue Recognition" in Item Category is -
    The material, with specified Item Category, is defined for income-accrual or not.
    Now, Income-accrual means, say, in a month, you have "n" no. of orders to deliver, but might possible that Invoice and Payment, may get done or may not be.
    So, to realise such income for a particular period, we run revenue-recognition (VF44). In VKOA, we maintain "Provisional Account" for such income.
    Once invoiced, Accrued income G/L gets debited and Customer G/L gets credited.
    [Revenue Recognition|http://help.sap.com/erp2005_ehp_03/helpdata/EN/4d/fcd139f6e4cf2ce10000000a114084/frameset.htm]
    As you asked for maintaining - Type "A" in Item Cat., go through
    [Time related Rev. reco.|http://help.sap.com/erp2005_ehp_03/helpdata/EN/59/aff23cd85c11d199d60000e8a5bd28/frameset.htm]
    Another Type is "B"
    [Service related Rev. reco.|http://help.sap.com/erp2005_ehp_03/helpdata/EN/59/aff23fd85c11d199d60000e8a5bd28/frameset.htm]
    Best Regards,
    Amit
    Note: There are few of my posts in threads
    Re: Revenue recognition
    Re: Revenue recognition design
    this will provide some in-sights for rev. recog.

  • Revenue Recognition (AR Closed for future month in error)

    Need help with revenue recognition. In the month of June in AR July was opened in error, so it was put in to close pending. Since July was closed the last 3 days worth of June invoices did not have any revenue recognition for July. Instead July's revenue was posted in to August since August was showing as a future period, and July was closed. Is there any fix to change the revenue recognition without doing a credit and rebill of 3 days worth of invoicing? If we reopen June, and run revenue recognition again, will that help? Thanks in advance for any help.

    Well there are a few ways you can go ahead and fix this, but it depends on lot of factors.
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    Now coming to the real world it's possible that the number of transaction's you have could be quite large and doing this manually through the screen might not be feasible. So you could possibly write a small pl/sql script to loop through those invoice's and incomplete them by calling the complete/incomplete group transaction's api. And then again complete them and re-run RR program to complete the fix.
    Please note though that you can incomplete a transaction only if it doesn't have any activity against it!
    With posted transaction's or transaction's having other activity, it's possible to fix them too but that would be taking things too far and Oracle Support/Development would be best equipped to provide you the fix in that scenario.
    HTH,
    Jasmeet.

  • Price Change for Revenue Recognition

    Dear experts,
    I am using Revenue Recognition of type B with Revenue Recognition before invoicing.
    I have an issue/question about the way price changes are treated in the functionality.
    The below example is used to describe the issue for your understanding:
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    2.Price of item in sales order: $100/EA
    3.Qty in sales order: 10 EA
    4.Delivery & Goods issue: 10 EA
    5.Revenue Recognised (VF44) for: $1000
    Accounting Entry:
    DR Unbilled Accounts Receivable $1000
    CR Revenue $1000
    6.Change in pricing master data: $120/EA
    7.Partial Invoice for: 2 EA @ $120/EA
    Accounting Entry:
    DR Customer $240
    CR Unbilled Accounts Receivable $240
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    Accounting Entry:
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    CR Unbilled Accounts Receivable $760
    CR Deferred revenue $200
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    Accounting Entry:
    DR Deferred revenue $200
    CR Revenue $200
    As you can see in the example above, the amount of the price difference is not credited to sales in step 7. From what I have seen so far the additional amount due to price difference gets credited to sales only after the total invoice value for the item exceeds the revenue recognized.
    Is there any option to set the system so that the price difference is taken into account for revenue recognition during each invoicing (even
    when the invoicing is partial) ?
    Thanks in advance for your help.

    The price difference will not go to Sales in Step 7.  The reason being Revenue Recognition works on the item rather than the amount.  Since you have run F-44, the system finds the same in Unbilled Receivables and posts to that account.
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    Refer Note 820417 Implementation guide for RR.  Download the attachments and look into Part2 doc page 13.  This explains how to deal with price changes in sales document.
    Hope this helps.
    Ravi.

  • Pricing procedure not to bill customer but revenue recognition

    I'm looking for guidance on how to setup a pricing procedure conditions.   First let me explain the situation.  What happens is the customer buys say 2000 software licenses on a sales order. The customer is billed and the customer account is debited and a deferred account is credited. Now the customer activates one of the licenses. The pricing from the sales order is copied to a contract. This contract has a start and end date for the license. Now that license can start to be recognized based on the period of the line item contract dates.. The issue we have is that normally for deferred revenue billing takes places. Problem is customer was already billing on the sales order. Somehow the pricing procure has to credit the deferred account that was posted on the sales order and then credit the revenue recognition account that can be used by transaction VF44.
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    Dr Customer $1000
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    Dr 2370 $120
    Cr 2371 $120
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    Rev Rec – VF44 for Period1
    Dr 2371 $10 Cr 4340 $10 Any ideas would be appreciated

    Hi
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    In this for contract item category you have to use free goods pricing which you set in item category settings in VOV7.
    Thank$

  • Config of billing type G2 for Revenue Recognition

    Hello Experts.
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    Branch/Head office C us tom er =Pa ye r/B ra nch =s old -t o p ar ty
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    Hi,
    You may be maually given the PR00 in ZBCR. But in your copy control (VTFA) --> item category ZTAD  --> pricing type, you may be maintained B (Carry out new pricing).
    If you maintain B, you have to change it to "D ". 
    When you maintain B, the system will search the Pricing again in Credit memo. All manual prices will be lost.
    Thanks
    M. Lakshmi Narasimhan

  • Cost of Goods & Revenue Recognition

    Dear All,
    I have a typical requirement related with the cost of goods sold (COGS) G/L account & the revenue recognition.
    Under SAP best practice, the COGS account is updated together with the Inventory account when post goods issue (PGI) is done.
    there are 2 scenarios here -
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    Here the revenue will be generated at three stages & the COGS will be updated after delivery (PGI).
    Is there any way we can update the COGS at the time of invoice in standard SAP.....?
    With best regards,
    Niyaz.

    Hi friend,
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    Best regards,

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