3547953 - How Event-Based Revenue Recognition (EBRR) calculates realized revenue in cases of cost based POC (Percentage of Completion)

When projects involve multiple currencies, fluctuations in exchange rates can lead to variations in the recorded value of cost and calculated revenues by EBRR.
This KBA describes how EBRR calculates realized revenue utilizing the cost based POC method for professional service projects.
EBRR recognizes revenue real time (with the corresponding cost posting) and during period-end closing (which is usually performed at month or fiscal period end).

SAP S/4HANA Cloud Public Edition

Overview of EBRR Calculation
As noted above, EBRR calculates in real time and recalculates during the fiscal period-end run.
 1. Realtime EBRR calculation
  With EBRR active, the system will post realized revenue at the time of time confirmation. The system uses the following steps to calculate the revenue:
    A) POC calculation:
     First planned costs in project currency are calculated:
     The planned quantity per period is multiplied with the cost rate per period.
     If the cost rate currency is different to the project currency, the currency conversion is done with P rate, which is valid at the beginning of the period.
     Please note the following exception: if project currency is equal to global currency the P rate valid at the beginning of the calendar year will be used.
     Then the planned cost in project currency is converted into planned costs in company code currency using M rate (WBS billing element creation date)

     Finally, POC is calculated: 
     Actual Cost in Company Code Currency / Plan Cost in Company Code Currency
    B) Realized revenue calculation:
     Planned Revenue in Project Currency × frozen MRate at WBS billing element Creation Date × POC 

 2. Period-End EBRR calculation
   During the period-end run, the system will adjust the realized revenue based on two key forecasting variables: Estimate to Completion (ETC) and Estimate at Completion (EAC). The ETC calculation depends on the project's planned cost, which can be influenced by the P-Rate, as previously detailed. 
    A) POC calculation:
     See 1. A) above and apply the same calculation.

     Then calculate the ETC cost based on customer project data as follows:
     (Planned Hours-Actual Hours) / Planned Hours × Planned Cost in Project Currency

     Next, calculate the EAC cost as follows:
     ETC cost + Actual Cost in Object currency (currency field in ACDOCA)

     Then, the EAC cost is converted into company code currency in the event that the project is in a different currency. In order to do this, the system uses an average rate which is calculated by using the actual cost.
     EAC cost in project currency × Actual Cost in Company Code Currency / Actual Cost in Object Currency

     Then, the system calculates the POC (Percentage of Completion):
     Actual Cost in Company Code Currency /EAC Cost in Company Code Currency

    B) Realized revenue calculation:
     Finally, Realized revenue is calculated as follows:
     Planned Revenue in Project Currency × frozen MRate at wbs billing elment Creation Date × POC 

     Please note: ACDOCP is not read during the process.

Ways to Influence POC Calculation
If you want to influence the POC calculation by using current conversion rates as opposed to the P-rate, you can update the calculations using the monthly P -rate and recalculate the customer project.

EBRR, revenue recognition, customer project, POC, calculation, exchange rate, currency

KBA , CO-PC-OBJ-EBR-2CL , Event-Based Revenue Recognition (Public Cloud) , How To