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 Activation of Revenue Recognition Functions Based on IFRS/U.S. GAAP

Use

You can control revenue recognition in your company so that you fulfill the requirements stipulated by the IFRS (International Financial Reporting Standards) and U.S. GAAP (U.S. Generally Accepted Accounting Principles) as best as possible.

Note Note

The revenue recognition functions have a strong impact on how revenues are accrued and posted.

To ensure that the system is stable and is configured correctly, SAP offers a free service for checking your revenue recognition settings. For more information about booking this service, see SAP Note 820417 Implementation Guide for Revenue Recognition .

End of the note.

Integration

Activation Using SET/GET Parameters

Before it was possible to control revenue recognition using the activation indicator Activate Customizing for Revenue Recognition , you had to use a SET/GET parameter to activate and deactivate it (SAP Note 835367).

  • This modification has now been replaced by the activation indicator and is no longer necessary.

  • When you execute the Customizing activity for activation, the system checks if you have already activated revenue recognition using the SET/GET parameter.

    • If it has already been activated using the parameter, the system automatically sets the activation indicator to active.

    • Once you have saved your settings in the Customizing activity Activate SD Functions , the system exclusively controls the activation and deactivation according to the settings in the Customizing activity.

      You can remove the modification from SAP Note 835367.

Prerequisites

The accounting documents that are created in revenue recognition can be compressed on the basis of the summarization logic in Financial Accounting.Your financial accounting manager and possibly your external auditor should approve the document compression . For more information, see the system documentation for the activation indicator.

Features

Activating the Functions
Revenue Recognition

You enable the functions for revenue recognition in Customizing for Sales and Distribution , under Start of the navigation path Basic Functions Next navigation step Account Assignment/Costing Next navigation step Activate SD Functions. End of the navigation path

If you set the indicator Activate Customizing for Revenue Recognition indicator, you determine that the functions for revenue recognition are controlled by the settings in Customizing.

  • If this indicator is set, you can flag item categories as relevant for the revenue recognition process and make other settings for revenue recognition.

  • If you remove the activation indicator, you can no longer change the Customizing settings.

    In this case, revenue recognition is not influenced in the current business processes as long as the item category used was set as relevant for the revenue recognition process.

    Future business processes are then based on the current Customizing settings for Revenue Recognition, which cannot be changed.

    If you want to adjust the current settings due to changed conditions, you must reset this indicator.

Revenue Compression

You can also decide if you want the system to compress accounting documents that are created in revenue recognition. Compression takes place according to the summarization logic in Financial Accounting.

Activation and deactivation are only relevant for the Revenue Recognition application with the Post Revenues (VF44) and Cancel Revenues (VF46) transactions.

When accounting documents are posted using revenue recognition (transactions VF44 and VF46), it is possible that an accounting document with a greater number of revenue lines to be posted is transferred to Accounting. These revenue lines are summarized in Financial Accounting and a compressed accounting document is thus created. For more information about the summarization logic, see the SAP Note 940784.

Process Control

Once you have set the activation indicator, you can control the revenue recognition process in more detail. You make these settings for the following process steps:

  • Revenue Recognition

  • Billing

For more information, see Control Revenue Recognition Based on IFRS/U.S. GAAP .

Authorization Check

There is no additional authorization check in the standard system. As long as you do not create an implementation, every user who has authorization for changing Customizing settings can make settings for revenue recognition.

So that only a restricted user group can execute this activity, the BAdI for Activating Functions BADI_SD_FUNCTION_ACTIVATION runs authorization checks. That way you can prevent users from changing or adding activation information.

You can implement the BAdI in Customizing for Sales and Distribution under Start of the navigation path Basic Functions Next navigation step Business Add-Ins (BAdIs) Next navigation step Define Additional Checks for Activating SD Functions End of the navigation path .