Support of Multiple Accounting Principles

Your company’s sales with customers may require that you recognize revenue in compliance with different accounting principles. The system allows you to specify the accounting principles that your company uses and customize certain processes and calculations of revenue recognition for each of those accounting principles.

Prerequisites

The contract liabilities and contract assets feature requires that you make the settings in the following Customizing activity:

Choose Start of the navigation path Financial Accounting Next navigation step Revenue Accounting Revenue Accounting Contracts Configure Accounting Principle-Specific Settings End of the navigation path .

Features

The system provides the following support for revenue accounting with multiple accounting principles:

Contract liabilities and contract assets
The system allows you to apply different methods for booking contract liabilities and contract assets, depending on the accounting principle applied. The system provides the following calculation methods:
- Invoice Due Date-Based Calculation
  This method is typically used when the applicable accounting principle requires that you book contract liabilities and contract assets, based on the invoice due amount.
- Invoice Date-Based Calculation
  This method is typically used when the applicable accounting principle requires that you book unbilled receivable and deferred revenue, based on the invoiced amount.
- None
  This method is typically used when the applicable accounting principle does not require that you book any contract liabilities and contract assets.
For more information, see the documentation provided with the following Customizing activity:

Choose Financial Accounting Revenue Accounting Revenue Accounting Contracts Configure Accounting Principle-Specific Settings .

Note
Different accounting principles may use different terms to refer to the concept of contract liabilities and contract assets.

End of the note.
Contract splitting on creation
Depending on the configuration, the back-end operational system may request the creation of a contract with performance obligations that involve different accounting principles. In this case, the system automatically splits the contract into several contracts, each for a specific accounting principle.
Account determination
The system allows you to determine the accounts that are relevant to revenue postings based on the corresponding accounting principle.
Revenue posting for multiple accounting principles
When you make revenue postings to the general ledger, the system requires that you select one accounting principle at a time.