SAP Knowledge Base Article - Public

3254188 - IFRS 15 / ASC 606 - Unbilled Receivables or Contract Assets?


You notice that the revenue recognition run posts revenue amounts as accrual as unbilled receivable when you expected the amounts to be posted as contract asset for sales document item XYZ-XX (XYZ-XX represents the sales document ID).


SAP Business ByDesign

Reproducing the Issue


Sales Order item XYZ-XX:

  • Item type: Service (fix price-project),
  • Net value: 1,000.00 LC (LC=Local currency),
  • Accrual method: 108 - Recognize using cost-to-cost project POC,
  • POC: 60%,
  • Invoiced Revenue: 500.00 LC.

Expected Result:

  • Due to the POC of 60% a revenue amount of 600.00 LC is due to be recognized.
  • As 500.00 LC are invoiced you expect the difference of 100.00 LC to be posted as contract asset.
  1. Go to the Revenue Recognition view in the Cost and Revenue workcenter.
  2. Find the respective revenue recognition run and open the application log.
  3. Go to the Processed Successfully tab. 
  4. You notice that the difference of 100.00 LC is listed under Total Accrued Revenue rather than under Current Contract Asset amount. 


Contract Assets: 

  • Contract assets are revenue values that are due (work done, revenue recognized), but under certain conditions, based on the POBs Allocated Amount (which does not need to be the same value as the sales document item's net value, for example when other POBs are to be fulfilled before the revenue becomes unconditionally recognizable).
  • Contract Assets stand for the "amount of revenue that is not yet billable".

Unbilled Receivables:

  • Unbilled Receivables are revenue values that are unconditionally due but no invoiced revenue exists (work done, revenue recognized without condition, no invoiced revenue).
  • Unbilled Receivable stand for the "amount of revenue that is billable".


In our example, the net value of sales order item XYZ-XX and the Allocated Amount of the corresponding POB, ABC-AA, are equal: 1,000.00 LC.

  • According to the POC 60% of revenue is due/billable/ to be billed, meaning 600.00 LC.
  • There is no difference between the sales order item net value and corresponding POB's allocated amount.
  • Therefore, 600.00 LC of revenue is unconditionally due.
  • As only 500.00 LC have been invoiced, the difference of 100.00 LC is accrued/posted as Unbilled Receivable.

Counter Example:

Contract assets would be posted, for example, if the POBs Allocated Amount was higher than the sales order item's net value:

  • Sales order item DEF-DD net value: 1,000.00 LC (DEF-DD represents the sales order item ID).
  • POB GHI-GG Allocated amount: 1,200.00 LC (GHI-GG represents the corresponding POB ID).
  • POC: 60%
  • Due revenue of sales order item: 600.00 LC (60% of sales order item net value)
  • Due revenue of allocated amount: 720.00 LC (60% of allocated amount)

If no invoice exists:

  • Realized Revenue: 720.00 LC
  • Contract asset: 120.00 LC (not yet billable, depending on fulfillment of other POBs)
  • Unbilled Receivable: 600.00 LC (billable, depending on sales order item net value)

If invoiced revenue exists:

  • Invoiced Revenue: 500.00 LC
  • Realized Revenue: 720.00 LC
  • Contract Asset: 120.00 LC
  • Unbilled Receivable: 100.00 LC

See Also

IFRS 15 / ASC 606: Revenue Recognition Accounting


unbilled receivable, contract asset, IFRS15, RAC , KBA , SRD-FIN-COR , Cost & Revenue , Problem


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