SAP Knowledge Base Article - Public

# 3260108- Unexpected Realized Revenue for Customer Contract Item with Fixed Price Per Period Invoicing (Flat Rate) with UoM Month

### Symptom

• You assign accrual method 304 - Straight-line – prorate partial periods or 302 - Straight-line – exact days to a Customer Contract Item with Fix Price Per Period Invoicing Method (flat rate).
• For the item you use the month unit of measure.
• You are aware that the due revenue is either fully (accrual method 302) or partially (accrual method 304) calculated based on a daily rate.
• However, the amount realized in the first period seems not based on a day rate for the item's life span.

### Reproducing the Issue

Customer Contract Item XYZ-XX example (XYZ-XX represents a contract item ID):

• Quantity: 1 month (time based)
• List price: 1.000,00 LC (LC=Local Currency)
• Start date: 01.01.YYYY
• End date: 31.12.YYYY (total life time: 1 year=365 days)
• Price per Period indicator is set
• Total net value for the full year: 12.000,00 LC
1. In the Cost and Revenue work center go to the Sales Documents Items view.
2. Select Customer Contract Items and find item XYZ-XX (XYZ-XX represents the Contract Item ID).
3. In the General tab verify that the Invoicing Method is Fixed Price per Period.
4. Navigate to the Accounting Data tab to verify that the item is using accrual method 304 - Straight-line – prorate partial periods or 302 - Straight-line – exact days.
5. Execute the revenue recognition run. You expect the due revenue, of at least the first period, to be calculated based on a daily rate. You therefore expect the run to realize a revenue amount of 1.019.18 LC (12.000,00 LC ÷ 365= 32,88 LC x 31=1.019,18 LC (rounded)).
6. Instead, the run realizes an amount of 1.018,50 LC (rounded).

### Cause

• The reference unit of measure of the standard unit MON-Month is s-Second with a reference factor of 2.629.746. However, 2.629.746 is the average day quantity of a month, 30,4369 days (rounded).
• With the Price per Period indicator set the revenue recognition functionality calculates each period based on this average value.
• As a result, the life time of contract item XYZ-XX adds up to 365,2425 days.
• Based on this calculation, the daily rate of contract item XYZ-XX is 32,85 (12.000,00 LC ÷ 365,2428) so that the due revenue for the first period of the item is 1.018.50 (30,85 x 31).

### Resolution

You have several options to prevent this situation:

• If the contract item life time covers full periods, rather use accrual method 303 - Straight-line – even periods.
• If you must use accrual method 304 - Straight-line – prorate partial periods or 302 - Straight-line – exact days
•  use a unit of measure that is not time based, for example EA-Each and maintain the full contract item net value,
• or do not work with a flat rate option and remove the Price per Period indicator for the contract item. Instead, enter the full order quantity, here 12 months.

This way, the due revenue calculation is based on 365 days. In our example, a revenue amount of 1.019,18 LC (12.000,00 ÷ 365 days =32,88 x 31) is due in the first period of the contract item's life time.

2897925 - Revenue Calculated Differently in First and Last Period for Contract Item with 304 - Straight-line – prorate partial periods Accrual Method

To check the unit of measure set-up

1. access the Quantities and Units of Measure fine tune activity.
2. Under Physical Units choose the Create and maintain Physical Units link.
3. Find the mo-Month unit of measure.
4. Here, you notice the Reference  UoM s - Second [unit of time] and the Reference factor 2.629.746.

### Keywords

contract item, revenue first period, 304 - Straight-line – prorate partial periods, 302 - Straight-line – exact days , daily rate, wrong realized revenue , KBA , SRD-FIN-COR , Cost & Revenue , Problem