3661143 - Revenue Recognition Run Shows Different Net Value Than Manual Planned Project Revenue for Leading Sales Order Item When Multiple Currencies are Involved

• Project XYZ is associated with multiple fix-price sales orders, created in different transaction currencies, for example sales order ABC, created in USD and sales order DEF, created in GBP. 
• The fix-price sales order items use accrual method 108- Recognize Cost-to-Cost Project POC. 
• For the leading item ABC-AA a manual project revenue is maintained in company currency, for example EUR. 
• The revenue recognition run shows a different net value in company currency EUR for item ABC-AA. You expect the net value of the run and the manual planned revenue amount in company currency EUR to be the same.  

Example: 

• Sales Order item ABC-AA (Leading Sales Order item): Net Value: 500,00 USD= 430,00 EUR (using ExR: USD-EUR: 0,86)
• Sales Order item DEF-DD: Net Value: 500,00 GBP= 570,00 EUR (using ExR: GBP-EUR= 1,14)
• Planned, manual project revenue: 1.000,00 EUR

But the revenue recognition run shows a net value of  978,14 EUR. 

SAP Business ByDesign

To check the manual revenue recognition data: 

1. In the Cost and Revenue work center go to the Sales Document Items view. 
2. Open the Advanced search.
3. In the Project ID field enter project ID XYZ and press Go.
4. The sales order items ABC-AA with a net value of 500,00 USD and DEF-DD with a net value of 500 GBP appear. Item ABC-AA is the leading sales order item. 
5. Select item ABC-AA and press Edit manual Revenue Recognition Data and choose Percentage of Completion. 
6. Under Reference Values, in the Plan Revenue field the value is entered in company currency EUR, i.e. 1000,00 EUR. 

To check the revenue recognition run's net value: 

1. In the Cost and Revenue work center go to the Revenue Recognition view.
2. Find the respective run and press View to open the application log.
3. In the application log go to the Processed Successfully tab - Advanced Information.
4. Choose the POC Based sub-tab.
5. Find sales order item ABC-AA. 
6. The amount, displayed in the Net Value field is not 1000,00 EUR. but, for example, 978,14 EUR.

When the planned revenue is maintained in company currency but the leading item is in a foreign currency, the revenue recognition run does not directly calculate the planned revenue as a net value. Instead, it performs a sequence of calculations to derive the actual net value:

1. Convert all net book values from the transaction currency into the company currency, using the exchange rate valid on the revenue recognition run's posting date.
2. Determine the ratio based on the manually maintained revenue amount in company currency: Formula: Manual planned revenue in company currency ÷ Total calculated net value in company currency.
3. Apply this ratio to each sales order item in the transaction currency.
4. Convert the adjusted transaction currency amounts into the leading item’s transaction currency, based on the leading sales order item's creation date.
5. Recalculate the total net value from the leading item’s transaction currency into company currency, using the exchange rate valid on the RRR posting date.

Example: 

Project XYZ: 

• Sales order items ABC-AA: Net value: 500,00 USD (leading item)
• Sales order item  DEF-DD: Net value: 500,00 GBP
• Manual, planned revenue amount: 1000,00 EUR (company currency)

Exchange rates on revenue recognition run's posting date: 

• USD-EUR: 0,85 (revenue recognition posting date)
• GBP-EUR: 1,14 (revenue recognition posting date)
• GBP-USD: 1.29 (valid on leading sales order item creation date)

1. Convert all net book values from the transaction currency into the company currency, using the exchange rate valid on the revenue recognition run's posting date: 

1.1. Sales order items ABC-AA: Net value: 500,00 USD= 425,00 EUR

1.2. Sales order item  DEF-DD: 500,00 GBP = 570,00 EUR

Total net value in company currency on revenue recognition run posting date: 995,00 EUR

2. Determine the ratio based on the manually maintained revenue amount in company currency: Formula: Manual planned revenue in company currency ÷ Total calculated net value in company currency: 

• Planned, manual revenue: 1000,00 EUR
• calculated net value on revenue recognition posting date: 995,00 EUR
• Ratio: 1000,00 EUR ÷ 995,00 EUR = 1.005025125628141

3. Apply this ratio to each sales order item in the transaction currency: 

3.1: Sales order items ABC-AA: 500,00 USD x 1.005025125628141= 502.51 USD

3.2: Sales order item  DEF-DD: 500,00 GBP = 502.51 GBP

4. Convert the adjusted transaction currency amounts into the leading item’s transaction currency, based on the sales order item's creation date:

• Sales Order item DEF-DD: 502.51 GBP x 1.29 = 648,24 USD
• Total net value in leading item's transaction currency: 502.51 USD (sales order item ABC-AA) +648,24 USD (sales order item DEF-DD)= 1.150,75 USD

5. Recalculate the total net value from the leading item’s transaction currency into company currency, using the exchange rate valid on the RRR posting date: 

•   1.150,75 USD x 0,85 = 978,14 EUR

With the above calculation, the revenue recognition run determines the actual planned revenue when the planned project revenue is maintained in company currency for the leading sales order item.

If you need to work with a specific net value in company currency, convert the planned revenue into the leading sales order item’s transaction currency using the exchange rate valid on the revenue recognition posting date. Then, maintain this value as the manual planned revenue.

In this case, the revenue recognition run will still apply specific calculations but reach the desired result (+/- minor rounding differences). 

Example: 

• Planned revenue in company currency: 1000,00 EUR
• Leading item's transaction currency: USD
• USD-EUR exchange rate on revenue recognition run's posting date: 0,85 - EUR-USD= 1.17647
• Planned revenue in transaction currency: 1000,00 EUR x  1.17647= 1.176,47 USD
• enter 1.176,47 USD as manual planned revenue for the project. 
• This time the revenue recognition run displays a net value of 1000,00 EUR

KBA , SRD-FIN-COR , Cost & Revenue , Problem