3437628 - Recognize based on manual amounts - Revenue Recognition run Posts Unexpected Accrued/ Deferred Revenue Amount for Sales Order Item in Foreign Currency

• You create Sales Order item XYZ-XX with net value in a foreign currency (FC) (XYZ-XX represents the sales order item ID, FC represents a foreign currency). 
• You assign accrual method 8-Recognize based on manual amounts to the sales order item. 
• You maintain manual revenue amounts per period in the foreign currency. 
• After executing the revenue recognition run for a period you notice the expected revenue in company currency LC, based on the exchange rate, valid on the posting date of the run is different to the posted, earned revenue amount. 
• You might notice values posted to Unbilled Receivables (accrual) or Deferred Revenues (deferral), if the sales order item's total invoiced amount is higher or lower than the total earned revenue amount. 

SAP Business ByDesign

1. In the Cost and Revenue work center go to the Sales Document Items view.
2. Find item XYZ-XX with a net value of, for example, 1000,00 FC. 
3. Choose the Edit Manual Revenue Recognition function and select Recognized Costs and Revenues. 
4. You maintain Recognized Revenue per period in a foreign currency (FC). 

   • Example: 

     Period 1: 01.05.YYYY - 31.05.YYYY : 150,00 FC.
     Period 2: 01.06.YYYY - 30.06.YYYY : 300,00 FC etc. 

5. You have invoiced the due revenue of 150,00 FC in period 1.
6. You expect the revenue to be realised based on the LC-FC exchange rate valid on the posting date of the revenue recognition run.
   • Example: Exchange rate on 31.05.YYYY of LC-FC = 1,09
   • You expect the realised revenue to be 137,61 LC (150,00 FC÷ 1,09)

But the revenue recognition run for period 1 realised a different revenue amount, e.g. 141,51 LC. 

You notice, the run posts the difference between the invoiced amount in company currency (137,61 LC and the earned revenue amount (141,51 LC) as Unbilled Receivable (3,90 LC). 

If the manual values of a sales document item of revenue type Product-Sales, are maintained in foreign currency, then the recognized revenue amount of the respective period is converted into company currency based on the exchange rate valid on the sales order item's creation date.

If the revenue to be recognized exceeds the actual (invoiced) revenue, then the difference between the recognized revenue and actual revenue will be offset as Unbilled Receivable (accrual).

If the revenue to be recognized is lower than the actual (invoiced) revenue, then the difference between the recognized revenue and actual revenue will be offset as deferred revenue. 

Example: 

• Sales Order item XYZ-XX was created on 03.01.YYYY. The exchange rate on this day is LC-FC 1,06.
• Therefore, in period 1 (here May,YYYY), the revenue recognition run realises 141,51 LC (150 FC ÷  1,06) and accrues the difference, 3,90 LC as Unbilled Receivable. 

Once the sales order item is completed, all accruals or deferrals will be cleared and only the actual, invoiced revenue is realised. 

If specific values in company currency are to be realised, maintain the manual values in company currency (here LC).

The revenue recognition run will then recognized the respective, manual value in company currency, provided the inverse exchange rate (here LC- FC) is the same as the original exchange rate (FC-LC) on all considered dates.

sales order item, recognize based on manual amounts, accrued revenue , KBA , SRD-FIN-COR , Cost & Revenue , Problem