Customizing

Use

You make the control settings for revenue recognition in Customizing. To do so, choose Start of the navigation path Sales and Distribution Next navigation step Basic Settings Account Assignment/Costing Revenue Recognition End of the navigation path . Make settings for the following objects:

Revenue recognition method for item category
Account determination

Features

Determining the revenue recognition method

The method of revenue recognition is determined by settings in the item category . Configuring the Revenue Recognition field determines which type of revenue recognition is used.

For time-related revenue recognition, you also make settings for the Accrual Period Start and for Revenue Distribution .
For service-related revenue recognition, you specify the Revenue Event .

Selecting the revenue recognition category

In the Revenue Recognition field, you specify a revenue recognition category for the item category. You can choose from the options in the following table:

Revenue recognition categories

Option	Description
No value	Standard revenue recognition The value of this item is recognized at the time of invoicing (standard).
A	Time-related revenue recognition The value of this item is recognized in equal proportions based on the accrual period of the item (sales document-based).
B	Service-related revenue recognition The value of this item is recognized on the basis of business transactions, such as goods receipt for delivery-relevant items or posting of sales orders for items that are not relevant for delivery.
D	Billing-based time-related revenue recognition The value of this item is recognized in equal proportions based on the accrual period of the item (sales document-based). Only amounts that have already been billed are recognized.
E	Billing-based service-related revenue recognition (IS-M) The value of this item is recognized on the basis of business transactions, such as goods receipt for delivery-relevant items or posting of sales orders for items that are not relevant for delivery. This option is designed specifically for the Media component (IS-M).
F	Credit/debit memos with reference to predecessor The value of this item is recognized from a credit or debit memo with reference to the SD document.

Account determination

To be able to use revenue recognition, you must select several special general ledger accounts. To do this, choose Start of the navigation path Sales and Distribution Next navigation step Basic Settings Account Assignment/Costing Revenue Recognition End of the navigation path .

Determining the revenue account

Revenue recognition uses revenue account determination. You can use the Assign G/L Accounts transaction (VKOA) to set up revenue account determination.

Determining the non-billed receivables account

The account for non-billed receivables is a special general ledger account used to determine revenue that has been recognized but not yet billed.

If you want to set up an account, link an account for non-billed receivables to a customer reconciliation account that is a part of your chart of accounts. You can do this using the Revenue Recognition: Unbilled Receivables transaction (OVUR).

In the standard, you can use balance sheet account 142100 for non-billed receivables (Accruals and Deferred Income) for the USA and Canada.

Determining the deferred revenue account

The deferred revenue account (or revenue accrual account) is a special general ledger account used to determine revenue that has been billed but not yet recognized.

The system determines the deferred revenue account for a document item using standard SD account determination. You can use the Assign G/L Accounts transaction (VKOA).

Note Note

You must enter the number of the deferred revenue account in the second column.

End of the note.