3677650 - POC-Based Revenue Recognition Takes No Effect On Cost Realization In Project-Based Sales Order Items

• Project-based sales order item XYZ-XX of project ABC (XYZ-XX represents the sales order item ID, ABC represents the project ID) uses a POC based accrual method, for example 108-Recognize using Cost-to-Cost Project POC or 102 - Recognize using cost-to-cost POC.
• The revenue recognition run realizes revenue based on the calculated/manual POC.
• However, the costs are fully recognized.

SAP Business ByDesign

1. In the Cost and Revenue work center go to the Periodic Tasks - Revenue Recognition view.
2. Open the executed Revenue Recognition run and navigate to the Processed Successfully tab.
3. Go to the Advanced Information tab and then to the POC Based sub-tab.
4. Find the respective sales order item.
5. You can see the maintained accrual method, for example, 108 - Recognize using cost-to-cost project POC or 102 - Recognize using cost-to-cost POC and manual or calculated POC, for example:40%.
6. In the Total Recognized COGs Amount field, the entire incurred cost amount is displayed, not a partial amount, according to the POC. 

Example: 

Incurred cost: 18.000,00 USD

Expected Result:

• Only 40% of the incurred costs (i.e. 7,200 USD) should be realized in line with the POC.

Actual Result: 

• The system realizes 100% of the incurred costs (i.e. 18.000,00 USD), regardless of the calculated or manual POC.

When working with POC based accrual method, such as 108 - Recognize using cost-to-cost project POC or 102 - Recognize using cost-to-cost POC. The POC (either manually maintained or automatically calculated) only affects recognized revenue. The costs are always realized fully. It is not possible to realize a cost percentage.

For example:
Sales Order Item XYZ-XX, associated with Project ABC.

Sales order item set up:
Sales order item net value/planned revenue: 60,000.00 USD.
Total incurred cost amount 18.000,00 USD.
POC (manual or calculated): 40%.

Revenue Recognition run:
Realized costs: 18.000,00 USD (100% of the incurred costs).
Realized Revenue: 24.000,00 USD (40% of the planned revenue).

If partially recognition of project costs is needed, the accrual method 106 – Recognize based on manual amounts may be used; It can be specified per time period, how much revenue as well as how much cost is to be realized for the project.

revenue recognition, Total recognized CoGS amount, Manual POC  , KBA , SRD-FIN-COR , Cost & Revenue , Problem