Features of Event-Based Revenue Recognition
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Event-based revenue recognition is enhanced in various releases of SAP S/4HANA Cloud Public Edition to support different scenarios dealing with service contract management.
Service Contracts with Price Adaptation Items
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Prerequisites for revenue recognition processing:
- The service contract item with the item category for price adaptation needs to be released.
- A billing plan needs to be created.
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In the example in the figure, there is a one-year service contract with a quarterly billing plan assigned. The monthly price of the product is adapted at the beginning of the second half year from 120USD to 150USD.
01/01/2019 - 06/30/2019:
- Quarterly billing = 120USD × 3 = 360USD
- Monthly revenue recognition = 120USD
07/01/2019 - 12/31/2019:
- Quarterly billing = 150USD × 3 = 450USD
- Monthly revenue recognition = 150USD
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Period 01
(1) Invoice Q1 - 360USD
(1') Defer Invoice - 360USD
(2) Revenue recognition at month end 01 - 120USD
![](/service/media/topic/f4150d6e-f87d-406c-81b1-459c3e961414/S4C25_30_en-US_media/S4C25_30_en-US_images/EBRR_Service_Contracts_005.png)
In period 07
(9) Invoice Q3 - $450
(9') Defer Invoice - $450
(10) Revenue recognition at month end 07 - $150
The price adaptation is reflected in revenue recognition.
Service Contracts with Credit Memos
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A 6-months service contract with a quarterly billing plan assigned:
- Service contract value: 720USD
- Duration: 1st January 2019 to 30th June 2019
- Quarterly billing = 720USD / 2= 360USD
At the end of June, the service contract is fully billed and the revenue is recognized.
The billing clerk creates a credit memo based on the earlier invoice with an amount of 360USD.
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Values from credit memos are considered for revenue recognition:
- For service contracts in the status fully billed and all billing documents have been posted
- With period end closing, the adjustments of revenue recognition for credit memos are carried out.
At the end of period 6, the service contract is fully billed and the period-end closing is completed for period 6:
(1) Credit memo 360USD
(1') Revenue adjustment for credit memo 360USD
(2) Clearing of deferred revenue with period end closing 360USD
Configuration for EBRR Service Documents
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Event-Based Revenue Recognition provides a lot of flexibility via tits revenue recognition SSCUI that is available.
![](/service/media/topic/f4150d6e-f87d-406c-81b1-459c3e961414/S4C25_30_en-US_media/S4C25_30_en-US_images/EBRR_SSCUI_003.png)
With the configuration app, you can:
- Assign a recognition key to an item category and optionally to certain materials
- Unassign a recognition key to deactivate event-based revenue recognition for the maintained entries, validate only for new service documents
- Delete wrongly created entries, validate only for new service documents. It is not possible to delete pre-delivered entries.
Note: if you want to discontinue event-based revenue recognition for the existing service documents, you could change the recognition key to CCSN in the "Revenue Recognition (Event-Based) - Service Documents" app. With the period end run, the system clears the remaining balance on EBRR accounts.