Configuration for Event Based Revenue Recognition

Objective

After completing this lesson, you will be able to understand the main configuration tables and settings for Event Based Revenue Recognition

Summary of Configuration for Event Based Revenue Recognition

Learn how to configure event-based revenue recognition in SAP S/4HANA Cloud Public Edition, professional services. Understand the main configuration tables, recognition keys, and document types for accurate financial reporting.

Application Area: Finance / Sub Application Area: Profitability Analysis / Item Name: Revenue Recognition​

SSCUI IDNameDescription
102530​Maintain Settings for Event-Based Revenue Recognition​Define the source accounts for cost and revenue that need to be considered by revenue recognition. Define the accounting rules for EBRR postings in finance for the relevant billing types. Finally, combine sources and accounting rules to determine the needed accounting for each method.​
102517​Derivation of Recognition Key for Projects​Recognition keys in customer projects are determined for each billing element based on Company Code, Contract Type and Material. Define all necessary combinations in this configuration table.​
104054​Define Replacement Rules for Recognition Keys​Recognition methods can differ based on accounting principle. In this configuration define replacement recognition keys for the needed combinations of accounting principle and standard recognition keys. During run time the system automatically replaces the recognition key in the defined combinations.​

Maintain Settings for Event-Based Revenue Recognition

The standard configuration is delivered with best practice assignment sources:

  • YMC – Cost Maintenance Contract
  • YD1 – Revenue Deduction-Time
  • OAU – On Account Utilization
  • YR1 – Revenue-Time
  • YT0 – Time Recording Costs

You can add new accounts to the delivered sources or create your own sources.

The SAP interface displays the Maintain Settings for Event-Based Revenue Recognition - Change screen. The dialog structure includes options for sources, assignment rules, recognition keys, company code and accounting, and document types. The sources list includes various categories such as cost of goods sold, currency adjustments, revenue contracts, unit-based deductions, and miscellaneous expenses. The section on the right shows the assignment of cost elements and accounts, including details like object numbers, rules, whether to include/exclude, and the account range with corresponding condition types. This interface allows users to configure and manage settings for event-based revenue recognition, ensuring accurate financial reporting and compliance.

Condition types define how the system calculates the estimated price of events for real time revenue recognition.

The delivered best practice assignment rules are:

  • COSPPS – Periodic Services
  • COSPTM - Service Time and Material DIP based
  • COSTPOC - Fixed Price Cost based POC
SAP Maintain Settings for Event-Based Revenue: Dialog Structure and Assignment Rules.

Define the sequence of postings by chart of accounts by source:

Dialog Structure Assign Sources and Posting Rules data,

Usage defines how the posting for the source is processed by revenue recognition. Usage is also considered during account determination.

Selecting the drop down in the usage field, you can navigate to the list of available usages that offer some additional description.

Data sheet displaying information for Usage of Values, Value Usage Zone, Notes, and other relevant information.

By clicking on the links in column "Scenario with Posting Example" a drop down area is displayed with a detailed description of the usage and examples.

Note

Note some usages refer to specific accounting principles, such as usage 103: Unbilled revenue processing.

Basic example of unbilled revenue displayed in sections such as Sequence of events, Profitability, Balance Sheet, and Income Statement.

GL accounts for deferrals, accruals, and adjustment postings can be defined for each combination of source and usage.

Data sheet displaying information for Recognition Keys.

The next table contains the definition of the recognition keys. The standard recognition keys applicable to professional services projects are:

  • Time and expenses:
    • SPTM
    • SPNTM
  • Fixed price:
    • SPFC
    • SPFCCM
    • SPFCQ
    • SPFCR
    • SPFCTR
    • SPNFC
  • Periodic service:
    • SPPC
    • SPPC1
    • SPNPC
Data sheet displaying information regarding Company Code and Accounting Principle Settings.

Note

Note the accounting principle (IFRS, USAP for US-GAAP, etc) can be defined for a combination of company code and assignment rule.

Field "Billable determination method" defines when revenue is considered billable when the IFRS 15 indicator in the Document Type (next configuration table) is active.

In case "No IFRS 15 processing" is set, the IFRS indicator is overruled and all IFRS 15 functions are switched off.

Data sheeting displaying information regarding Document Types.

In this section for each relevant accounting document (document type), attributes controlling the creation of the document can be specified, for example how multiple currencies are handled, or how potential loss is accounted for in POC recognition methods. Document types are used for the creation of accounting documents of Event Based Revenue Recognition.

Loss handling supports the manual or automatic creation and usage of provisions for imminent loss.

If the IFRS 15 indicator is set (and not overruled in the definition of the recognition keys), these functions are enabled:

  • Splitting revenue adjustments into contract liabilities, contract assets, and unbilled revenue (accounts defined in the assignment rule section)
  • Supporting contract assets and contract liabilities from the bundling of sales order items when using Event-Based Revenue Recognition for Sales Orders (not for customer projects).

If the indicator is not active, revenue adjustment splits just into deferred revenue and accrued revenue.

Derivation of Recognition Key for Projects

This configuration table contains the combinations of Company Code, Contract Type and Material that result in the selection of a recognition key (revenue recognition method).

The relevant contract types for customer projects are:

  • PS01 Fixed Price
  • PS02 Time and Expenses
  • PS06 Periodic Service
  • PS07 Usage Based

If an asterisk is entered in the material field, all materials are considered, so the recognition key is determined just by the combination of company code and contract type.

SAP Derivation of Recognition Key for Projects: Change. Displaying information such as Company Code, Contract Type, Material, Recognition Key, and Bundling.

If the bundling indicator is set, the IFRS 15 functionality is activated for revenue recognition in sales contract items:

  • Allocation of transaction price
  • Splitting of liability and assets

This indicator is not relevant for customer project based EBRR.

Define Replacement Rules for Recognition Keys

SAP New Entries: Added Entries interface displaying information regarding Replacement Rule of Recognition Keys for Revenue Recognition.

Replacement of recognition keys can be used when a parallel ledger with different accounting rules are used in the countries the company operates.

When the selected accounting rule is detected, the original derived recognition key is automatically substituted by the replacement key.

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