Revenue Recognition in Fixed Fee Contract

[former_member401443]

Hello All

I have a scenario where I enter in a contract with Customer that is Fixed Fees.

Then I supply Product to Customer Every Month and there is no Subsequent Invoice.

Can any one tell me how to Recognize the Revenue.

Example

Contract - 1200 Dollars. Customer Invoiced and Paid Upfront.

Material is Sent - Every Month (Create Delivery From Contract)

Business wants to Recognize the Revenue when Material is Sent

Regards

Mukesh Mahajan

[former_member401443]

Hi

Can you tell what will be the Revenue Recognition Category to be selected in the Contract Line Item.

Shall I make it Blank or Some other

Regards

Mukesh Mahajan

[Lakshmipathi]

Try by having "A"  and Revenue Distribution can be "C"

G. Lakshmipathi

[Lakshmipathi]

You can create an invoice against contract for the entire amount.  The entire amount collected should be posted to some accrual G/L Account which can be done via F-28.  For making every month despatch, you need to create a release order from contract against which, delivery document can be generated.  Here no invoicing.

At the month end, finance team need to run VF44 referencing that contract, so that the accrual amount pertains to that despatch / month would be converted to sales account.

G. Lakshmipathi