Revenue recognition for sub-item

[Former Member]

I have a product called Term license, when i enter this line item in sales order, automatically i should get a sub-item warranty under it (which is only for internal purposes).

And suppose the price of the product is $1000/-, 10% of the cost of this product (i.e. $100/-)will be considered as the cost for warranty for 12 months.(The warranty is not billed separately to customer, but internally the 10% of the cost is considered as cost towards providing warranty support.)

The customer gets billed only for Term Licence and the warranty piece does not show up in the invoice. The revenue for licence part gets recognized based on the milestones completions 10/70/20%. So $900 is recognized for the term licence.

Then warranty period starts once the milestone of 70% is confirmed. And from that time the revenue $100 is split for 12 months and then this revenue is recognized monthly based on billing.

Can anyone guide me how we can set up this configuration.

Regards,

Ajay

[Former Member]

Hi Ajay,

As far as I understood that you want to realise the warranty amount of 100$ from the customer once your 70% milestone is completed.

I think you can start realising this amount along with the license cost with each milestone.But keep your money in the deffered account.Once your 70% milestone is reached then you can start running the transaction VF44 one by one for each line item.

In this case your revenue account will only get hit once the 70% milestone is reached.

Reward points if it helps.

Regards

Karan

[Former Member]

Hi Gurus,

Any suggestions on this?

Regards,

Ajay