POC Base Revenue Recognistion

[sukhveer_singh2]

Dear Team,

We are in process of POC base revenue recoginization.

We selected RA method 3, cost based POC base RA.  POC is Actual Cost/Plan Cost*100 and Revenue will be POC % *Planned Revenue. Every month revenue will be recoginize. Incase of invoicing excess or under billing entries will be recorded.

This Result Analysis process is working fine and values are coming in RA Cost Elements.

Now we need to do settlement and entries should be as below (for revenue recognition)

P&L	Cost of sales	15,000 dr
BS	CIP - Margin Account	5,000 dr
P&L	Sales	20000 cr

From the configuration for settlement rule (Profile and Allocation Stracture) but we are not able to achive the above entries. We are able to get 1st and 3rd P & L entry, but not able to get BS Gl in the accounting entry for settlement.

Please help us to achive the target.

Thanks & Regards,

Sukhveer.

[Former Member]

Cost based POC is probably the easiest and most widely used RA method in most countries where unrealized profits are allowed to be shown on fin. statements.

Three GL entries are all that are needed for POC calculations based on value (i.e cost).

1. Unbilled Revenue adjustments

2. Advance billing adjustments

3. Increase / decrease in Provision on Loss Contracts

The offset postings to BS are Unbilled A/R, Advance Billings and Provision for Loss on Contract. These of course reflect the corresponding Balance Sheet accounts for the P&L accounts affected by RA calculations.

The entry you are asking (capitalizing margin to Balance Sheet) sounds odd. To me, this seems calculated margin and should be posted to COPA instead. Hope this helps...

[kenmelching]

Settlement of the Results analysis calculations occurs in 2 parts, 1.  Transfer to Accounting, this is the movement from the P&L to the BS that RA has calculated, it is a FI only posting, there is no CO document, and 2.  the settlement of what RA has left on the P&L using the RA cost elements.

When RA moves value from the P&L to the BS it is not available for settlement to COPA.

Please give more detail where the posting to the CIP account originates.

[sukhveer_singh2]

Dear Ken,

I have mailed you the document with screen shot of cinfig and the required entries/ output.

Kindly go through the same for detials. We are not able to  attach this doc here.

Your expert advice can help in solving this critical requirement.

Regards,

Sukveer

[sanjeevc]

Hi Sukhveer,

if below entry is not coming then let me know have you created balance sheet GL and assigned it to BS cost element account?

BS

CIP - Margin Account

5,000 dr

are you referring accrued as BS CIP Margin account?

if entry is coming exclude pending revenue entry by accrued account then config is ok for RA but above point you have to check if you are able then please share some screenshot.

Regards,
Sanjeev

[sukhveer_singh2]

Dear Sanjeev,

We are unable to created the Margin BS Gl as cost element.

Regarding config, kindy proved me your email detials, will send you the configuration and requirement entries.(document)

Regards,

Sukhveer

[sunil_yadav2]

Hi Sukhveer,

please go through below document :

you will come to know how to work with cost based POC method.

more over you can take help of CO Consultant for settlement entries.

thanks

Sunil

[sukhveer_singh2]

Dear Sunil,

We configured RA and getting values. But our problem is settlement or entries. If we are trying to do settlement and defining B/L in settlement rule then while CJ88 system is giving error that B/L GL can not be assigned. Simply we need below entry after RA calculated Margin/profit.

Can some one help us.

BS

CIP - Margin Account

5,000 dr

Thanks,

Sukhveer.