Hello everyone. I am hoping someone can advise on how we can deal with the situation below. Parent received an order for $100 . Billing will be done solely by parent utilizing advanced invoices as determined by a billing schedule per the order agreement. Subsidiary will work on the order and deliver to the customer on behalf of parent. Of the $100, the parent will recognize $20 in revenue with no costs, and the subsidiary will recognize $80 in revenue with planned cost of $40. Over the life of the project in the subsidiary, it recognizes revenue based on POC. The parent will recognize revenue based on the subsidiary’s POC. When the subsidiary finishes the project and delivers the item to the customer, it will then invoice the parent for $80. Revenue is recognized each month via revenue recognition.In terms of setting this up, my thought is:Parent creates customer order for $100. A manual POC project is created with planned revenue of $20 and no planned costs. Subsidiary creates a customer order for $80. A POC project is created with planned revenue of $80 and planned cost of $40. Each month, the subsidiary recognizes revenue and costs based on POC and via revenue recognition. The parent does the same, but through manual POC whereby the POC is specified to match the POC of the subsidiary.Questions:Is this an appropriate way to set up for the scenario mentioned? My understanding is that when the parent project is fully completed, a CD invoice will be generated while also booking entries to reverse the revenue already recognized. But if the customer order was set up as $100, then it would recognize $100 in revenue thereby overstating revenue by $80. Further, the project totals would show that $100 of revenue was recognized instead of $80. If this is the case, then something needs to be done to get that revenue down to $20 (via manual Q voucher and specifying a project activity?) This is essentially a drop ship type situation so it is not unique and other companies probably deal with this. This is the first time we are encountering this and we would like to avoid manual processes as much as possible. I would really appreciate any thoughts/advice/ideas.

Drop ship orders | IFS Community

Hello everyone. I am hoping someone can advise on how we can deal with the situation below.

Parent received an order for $100 . Billing will be done solely by parent utilizing advanced invoices as determined by a billing schedule per the order agreement.
Subsidiary will work on the order and deliver to the customer on behalf of parent.
Of the $100, the parent will recognize $20 in revenue with no costs, and the subsidiary will recognize $80 in revenue with planned cost of $40.
Over the life of the project in the subsidiary, it recognizes revenue based on POC. The parent will recognize revenue based on the subsidiary’s POC.
When the subsidiary finishes the project and delivers the item to the customer, it will then invoice the parent for $80.
Revenue is recognized each month via revenue recognition.

In terms of setting this up, my thought is:

Parent creates customer order for $100. A manual POC project is created with planned revenue of $20 and no planned costs.
Subsidiary creates a customer order for $80. A POC project is created with planned revenue of $80 and planned cost of $40.
Each month, the subsidiary recognizes revenue and costs based on POC and via revenue recognition. The parent does the same, but through manual POC whereby the POC is specified to match the POC of the subsidiary.

Questions:

Is this an appropriate way to set up for the scenario mentioned?
My understanding is that when the parent project is fully completed, a CD invoice will be generated while also booking entries to reverse the revenue already recognized. But if the customer order was set up as $100, then it would recognize $100 in revenue thereby overstating revenue by $80. Further, the project totals would show that $100 of revenue was recognized instead of $80. If this is the case, then something needs to be done to get that revenue down to $20 (via manual Q voucher and specifying a project activity?)

This is essentially a drop ship type situation so it is not unique and other companies probably deal with this. This is the first time we are encountering this and we would like to avoid manual processes as much as possible. I would really appreciate any thoughts/advice/ideas.

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