2517619 - Sales Order Item With Recognize Using Cost-to-Cost Project POC Accrual Method - Accrued CoGs Amount After Revenue Recognition Run

You have executed the Revenue Recognition run for a project-based Sales Order item with accrual method 108-Recognize Cost-to-Cost project POC.
In the run's application log or in the Sales Accruals report you notice that a certain Cost of Goods sold (CoGs) amount has been accrued.
You are wondering how this amount has been calculated and why it was posted as accrued CoGs.

SAP Business ByDesign (All versions)

1. In the Cost and Revenue workcenter go to the Periodic Tasks - Revenue Recognition view.
2. Open the executed Revenue Recognition run and navigate to the Processed Successfully tab.
3. Go to the Advanced Information tab and then to the POC Based sub-tab.
4. Find the respective sales order item.
5. In the Total Accrued CoGs Amount column an amount is displayed. This amount is being added to the Current Recognized CoGs Amount.

For project based sales order items with accrual method 108- Recognize using cost-to-cost project POC, costs are being accrued when a loss of the project based sales process is being identified in the period. This is the case when the planned project cost amount exceeds the planned project revenue amount.

• In a first step the revenue recognition identifies the total planned loss by calculating the difference between the Planned/ Estimated Cost and Planned Revenue.
• In a second step the actual loss is being realized according to the used POC, calculated as a ratio of the actual and planned costs. This amount is being posted as Accrued CoGs Amount.
• The accrued CoGs amount/ realised loss amount will decrease as the POC increases.

To verify the correctness of the planned loss amount posted as accrued cost of goods sold all relevant settings, amounts, formulas and postings need to be identified.

1. Sales Order item Accrual Method: 108-Recognize using cost-to-cost Project POC: With this accrual method all fixed-price sales order items that are in the same project are bundled into a single item for the purposes of revenue recognition.
2. Planned/Estimated Costs: The Planned work maintained in the project tasks associated with all fixed price sales order items. The planned costs are derived either from the labour resource cost rates (for internal employees, according to their job title)or the service cost rates of the valuation data of the service master (for external service providers or if no labour resource cost rate can be derived for the reporting period).
3. Actual Costs: Bundled, incurred costs connected with all fixed price project based sales order item (such as internal and external time recordings, Supplier invoices, expense reports etc.).
4. POC- Percentage of Completion: Formula: Total Actual Cost of Bundled Sales Order Items ÷ Total Estimated Project Costs.
5. Planned Revenue: The total net value of all bundled sales order items as determined by the prices in the sales order.
6. Total Planned Loss: Formula: Total estimated/planned project cost - Total planned revenue (only for fixed price sales order items).
7. Realized Planned Loss/Accrued CoGs amount: The percentage of the total planned loss according to the POC used (Total Planned Loss - POC).
8. Total Recognized Costs: Total Actual/Incurred Costs + Total Accrued CoGs.
9. Current Recognized CoGs Amount: Total Recognized CoGs Amount - Previously Total Recognized CoGS Amount

Example:

1. Sales Order Item ABC-XX, associated with Project task DEF-Y
2. Total (bundled) Planned Cost: 600,00 LC (LC represent Local Currency): Planned Work: Service XYZ, 10h, Team Member: Internal Employee,  Cost Rate 60,00 LC per hour, derived from labour resource.
3. Actual (bundled) Cost: 420,00 LC, 7 hours  (7 x 60,00 LC).
4. POC: Actual Cost ÷ Planned Cost: 70%.
5. Total (bundled) Planned Revenue: Sales order item list price: 550,00 LC. 
6. Total Planned Loss: Total Planned/Estimated Cost - Total Planned Revenue: 600,00 LC- 550,00 LC= 50,00 LC.
7. Realized, Planned Loss/ Accrued CoGs: 70% of Total Planned Loss: 35,00 LC: Accrued CoGs: 15,00 LC (Total Planned Loss minus POC, 50,00 LC - 35,00 LC). 
8. Total Recognized Costs: Actual Costs + Accrued CoGs: 420,00 LC + 50,00 LC = 470,00 LC.

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