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Hello,

We are facing a problem on the revenue recognition.

 

Context

In the Revenue Recognition process, capitalization and revenue recognition is launched for period 6 of the accounting year.

788 projects are identified by the system.

The capitalization step is processed without error raised by IFS.

Expected vouchers are created for capitalization.

The revenue recognition is processed without error raised by IFS.

Expected vouchers are created for revenue recognition except for 7 projects.

 

Issue

Those 7 projects are setup as follow:

They all have invoices (advance invoices -> actual revenues) but no cost.

Example:

 

In the Periodical Capitalization and Revenue Recognition Project screen, the actual revenues and costs are calculated as expected:

The capitalization voucher is also generated as expected:

Issue: However, no revenue recognition voucher is generated to balance the actual revenue, i.e. the Actual and Recognized Revenue Difference seems to be ignored.

 

We have opened two IFS cases on this subject. The responses indicate that this is standard IFS behavior; no revenue recognition if there is no cost.
I know other customers are having this problem as well.
Is there a workaround or another procedure? Can it be automated?

 

Thanks and regards.

Well, If I understand well, revenue to be recognized for these projects is zero each time. Is this what you expect?

As a reminder: revenue recognition process consists of two steps, capitalization and recognition.

Capitalization step is reclassifying actual project revenue (I am not sure if you are capitalizing costs, but they are none here anyway) to a liability account (GP4 posting control). Assuming GP17 is revenue type, after capitalization step your revenue for a period is zero.

Then revenue to be recognized is calculated as actual cost + POC (percentage of completion) factor multiplied by estimated project margin (estimated revenue - estimated costs).

POC factor is in your case actual cost divided by estimated cost. 

For these projects bot actual cost and POC is zero, so revenue recognition formula result is zero as well - nothing to be recognized as revenue. So indeed - no recognized revenue if there’s no cost.

The only posting missing, in my opinion, could be difference between actual revenue and recognized revenue - I can see this flag is checked for your project. I would expect all capitalized revenue to be reclassified to over-billing (I am not sure which GP posting control is responsible for that, it was GP91 in my environment, but I think it got changed in later versions). This might required further discussion on support case.

hi,

@Adam Bereda actually this is the issue, posting GP23/GP25 is not retrieved so then that means we are not able to get the over billed voucher…

I tough about a workaround by putting cost in this period as 0,01  @Nikita38   what do you think?

regards,

Kherdine

OK, I would recommend to raise a support case to IFS - as per my understanding posting GP23/GP25 are expected even when recognized revenue is 0 - as long as actual is non-zero. 

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