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Example documentationExample: Acquisition Contract with Accruals

 

You want to create accruals for future settlements of outgoing royalties. The OR data collector contains values that trigger a payment to the licensor during the next settlement. Since this settlement is not performed during the current period, and takes place at a subsequent stage, you want to create accruals in FI for the corresponding license acquisition contract. The accruals created are to be written off during the actual settlement.

Representation in the License Acquisition Contract

You create a license acquisition contract to purchase rights to the IP associated with a book. You intend to publish and sell the book and agree that an author is to receive 10% of all book revenues. The settlement period is quarterly and accruals are to be posted monthly.

Maintain rights and variable royalties

Create an item with item category IEM2 (IPM acquisition rights and royalties item with difference calculation) or a similar item category that you define (in SAP Customizing).

  • Define the rights dimensions for the IP within this item.

  • Define variable royalty rates (price agreements) within this item.

    In this case, enter 10% using price type 17PO (percentage license fee OR) or a similar condition type that you define (in SAP Customizing).

  • Set the settlement period on the billing plan to quarterly.

  • Set the accrual period to monthly. Additionally, assign a date rule for the accrual date.

Result

Creating accruals corresponds to a simulation of the OR settlement using the current values available.

If the licensor's share of the exploitation-dependent license revenues was $1000 for the first month, $1500 for the second month, and $ 800 for the third month, the system accrues $1000 for the first month, $1500 for the second month and $800 for the third month.

Values determined in this manner are transferred to the Accrual Engine (ERP), which makes the postings to the corresponding accrual and expense accounts.

After the third month, when the actual OR settlement is due, the Billing Engine posts the actual amount for the quarter, $3300. The Accrual Engine writes off the accruals created completely.