3376583 - Net Value in Revenue Recognition Run is Different to Manual Planned Revenue of Leading Sales Order Item

• You create different fix-price sales order items of different sales orders for customer sales project XYZ, for example item ABC-AA and item DEF-DD (XYZ represents the project ID, ABC-AA and DEF-DD represent items of two different sales orders). 
• All fix-price items use accrual method 108 - Recognize using cost-to-cost project POC.
• One or more sales order items have a net value in a foreign currency. For example, item ABC-AA has a net value in company currency, CC, and item DEF-DD has a net value in foreign currency, FC. 
• Item ABC-AA, maintained in company currency, is the Leading Sales Order Item. 
• In the Edit Percentage of Completion screen you maintain a manual Plan Revenue value, for example 1.000,00 CC. 
• You execute the revenue recognition run and notice that the Net Value is different to the manual amount. Usually, the net value in the run and the manual plan value in the Edit Manual Revenue Recognition data screen are the same. 

SAP Business ByDesign

1. In the Cost and Revenue work center go to the Sales Document Items view. 
2. Open the Advanced search (filter icon). 
3. In the Project ID field enter XYZ and press Go. 
4. The items ABC-AA with a net value in company currency CC and DEF-DD with a net value in a foreign currency FC , appear. 
5. In the Accounting Data tab you ensure that both items are using accrual method 108-Recognize using cost-to-cost project POC. 
6. Item ABC-AA is the leading sales order item. 
7. Select item ABC-AA and press Edit Manual  Revenue Recognition Data and select Percentage of Completion.
8. In the Edit Percentage of Completion screen enter a value into the Plan Revenue field, for example 1000,00 CC. 
9. Execute the revenue recognition run. 
10. In the Application log go to the Processed Successfully tab, select POC-Based  and then the Advanced Information sub-tab. 
11. Here, for item ABC-AA you notice that the Net Value is different to the amount you maintained in the Plan  Revenue field for item ABC-AA. 
12. You expect the Net Value of the run and the Plan Revenue amount to be the same. 

• In general, when a sales document item is created in a foreign currency, its Net Value in company currency is calculated based on the exchange rate valid on the item's creation date. 
• In regards to the manual Net Value for the leading item ABC-AA, the net value in company currency is calculated back into foreign currency based on the sales order item's creation date. 
• For the revenue recognition run this value in foreign currency is then calculated back into company currency based on the exchange rate valid on the run's posting date. 

To calculate the Leading item's net value apply the following formula:

Formula: 

(Manual amount in company currency x FC-CC exchange rate at sales order item creation date) ÷ FC-CC exchange rate, valid on the run’s posting date.

Example: 

Sales Order item ABC-AA:

• Net value/List price: 800,00 CC,
• Leading Sales Order item
• Manual Plan revenue: 1130,00 CC

Sales Order item DEF-DD: Net value/List price: 500,00 FC

ExR FC-CC on creation date of item ABC-AA: 1,5

ExR FC-CC on revenue recognition run posting date: 1,2 

Item Net value in Revenue Recognition run: 

(1130,00 CC x 1,5) ÷ 1,2 = 1.412,50 CC

 3104356 - IFRS15 - Realized Revenue Much Higher or Lower Than Expected for Customer Contract Item in Accounting Period

manual plan revenue, sales order item, revenue recognition, 108 - Recognize using cost-to-cost project POC , KBA , SRD-FIN-COR , Cost & Revenue , Problem