2940572 - Revenue Recognition Run Generates Redundant Debit and Credit Posting Lines for Deferred Revenue / Cost of Goods sold

• You execute the Revenue Recognition Run.
• You notice that the run has debited and credited the same amounts with all the exact same accounting details on the Deferred Revenue Account or the Deferred Cost of Goods Sold Account for no apparent reason.
• Or you might notice that fully completed sales order items are still considered by the revenue recognition run. The Revenue fully recognized indicator is not set for these items.

SAP Business ByDesign

1. In the Cost and Revenue work center go to the Revenue Recognition view.
2. Open the run in question. 
3. Navigate to the Postings tab and here to the Journal Entries sub-tab. 
4. You notice two posting lines, one debit, one credit with exactly the same amount. 
5. Click the Journal Entry ID to open the Posting.
6. You verify that both posting lines, on the Deferred Cost of Goods sold or the Deferred Revenue account (depending on what is to be recognized by the run) contain exactly the same information (no change of Project Task, Sales Document Item, Business partner, profit center).
7. Go to the Processed successfully tab of the run. In the POC based or Time and Material Based sub-tab you find sales order items that completed and should no longer be processed by the run. Take note of their IDs, for example XYZ-XX (XYZ-XX represents the ID of a completed sales order item). 

Revenue Fully Recognized Indicator not set:

1. Navigate to the Sales Document Items view in the Cost and Revenue work center.
2. Find item XYZ-XX and go to the Dates tab. 
3. Verify that a date is maintained in the Final Delivery or Invoice Date field. 
4. Navigate to the Accounting Data tab. 
5. Here, the Revenue Fully Recognized indicator is not set. 

• You wonder why these seemingly unnecessary postings have been made. 
• You wonder why completed sales order items do not get finished for revenue recognition. 

Even though the Function of Expense reporting principle is used for the company's set of books a profit center is associated with the affected sales order item(s). Therefore, the revenue recognition run tries to post all values to the respective profit center. However, as profit center reporting is not active, the postings gets blocked. so that the values are posted back again, creating these redundant posting lines:

First, verify that the Function of Expense reporting principle is used:

1. In the General Ledger go to the Sets of Books and Assigned Companies view. 
2. Find the respective company and set of books combination and select it. 
3. In the Details section, under Set of Books Information check the Reporting Principle. Here, Function of Expense is selected.

Cause A) The set of books selected for the revenue recognition run uses the function of expense reporting principle but profit center reporting is activated in the solution profile:

With the function of expense reporting principle in place it is not intended to derive profit centers and segments in the relevant journal entries.

However, the revenue recognition run still tries to distribute values to a profit center, because profit center reporting is active:

1. In your project scope go to step 4- Questions.
2. Under Financial and Management Accounting select General Ledger and choose General Ledger again. 
3. In the questions tab, the question under Profit Center and Segment Accounting is selected. 

B) If profit center reporting is not part of the solution scope, then the sales unit associated with sales order item XYZ-XX is defined as profit center in the respective organizational structure. In this case the profit center is assigned to the sales order item:

1. In Cost and Revenue go to the Sales Document Items tab. 
2. In the General tab, under Organizational Data take note of the Sales Unit ID. You notice that the Profit center field is filled, even though the function of expense reporting principle is used. 
3. Go to the Org Structures view of the Organizational Management work center. 
4. Find/ Locate the sales unit ID you just noted down. 
5. Navigate to the Definitions tab: You notice the org unit is defined as profit center.

In this case, the profit center is assigned to the sales order item so that the revenue recognition run tries to distribute all values to the profit center.

If profit center reporting is active we recommended to use a reporting principle which includes profit center accounting, such as 'Function of Expense, Profit Center/ Segment', if working with profit centers and segments is an option for your company. Another option would be to deactivate profit center accounting in the solution profile.

If profit center reporting is not active and if the function of expense reporting principle is to be used but sales units are defined as profit center we recommend to remove the profit center definition for these organizational units.
From the date of activation all new sales documents will be created without a profit center association, so that the revenue recognition run will no longer generate redundant postings.

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