Accounting Distribution Creation

Amount-based Contract Lines

When you select a product onto a contract, the system populates the revenue distribution accounting based on distribution sets to the revenue fields on the Accounting Distribution page. Additionally, the PeopleSoft General Ledger business unit on the accounting distribution is populated with the PeopleSoft General Ledger business unit associated with the PeopleSoft Contracts business unit of the contract. The PeopleSoft General Ledger business unit and revenue accounting distribution are editable for each fixed-amount contract line on the Accounting Distribution page. You can edit the existing revenue accounting distribution or split the revenue across multiple accounting distributions (such as departments). When you save the Accounting Distribution page, the system performs combination editing to ensure that the combination of ChartFields that you specify are valid for the selected PeopleSoft General Ledger business unit.

When you save the Accounting Distribution page, the system performs combination editing to ensure that the combination of ChartFields that you specify are valid for the selected PeopleSoft General Ledger business unit.

In addition to ChartField Combo-Editing, the system checks to ensure that the amount distributed on the Accounting Distribution page equals the amounts on the contract line defined on the billing allocation page and revenue allocation page. The revenue amount on the contract line may be different than the billing amount on the contract line if the contract separates billing and revenue on fixed amount contract lines. If not separated, then the revenue amount will equal the billing amount. If you complete amount allocation after you distribute the accounting, an error may appear. If ChartField Combo-Editing or distribution amount errors exist, you see an Action Required link on the Details tab of the Contract - Lines page.

Rate-based Contract Lines

For rate-based contract lines, the revenue distribution accounting is defined by using accounting rules through the As Incurred Accounting Distribution page. Like distribution sets, rate-based accounting rules may reference distribution codes for ease of use. However, each accounting rule allows only one revenue distribution to be defined. When forecasting revenue for rate-based lines, use distribution sets with distribution codes.

Recurring Contract Lines

For recurring contract lines, the system handles the accounting similar to fixed-amount. The system populates the revenue distribution on the Accounting Distribution page based on distribution sets. If the revenue distribution code in the distribution set has a related contract liability distribution code, the system also populates the contract liability distribution on the Accounting Distribution page.

Amount-based Contract Lines

If you selected contract liability recognition for a contract line, the contract liability accounting distribution is editable for each fixed-amount contract line on the Accounting Distribution page. The GL Unit (general ledger unit) field populates with the PeopleSoft General Ledger business unit associated with the PeopleSoft Contracts business unit of the contract.

When you save the Accounting Distribution page, the system performs combination editing to ensure that the contract liability accounting that you specify is valid for its general ledger (GL) business unit.

The contract line contains a Contract Liability accounting date. When you run the Contract Liability process, you specify a date range for that process run. The system processes any contract lines belonging to active contracts with a Contract Liability accounting date within the range specified and that have not already been processed.

If you enter a Contract Liability accounting date that falls before a contract line's earliest accounting distribution effective date, the system warns you that an effective-dated accounting distribution needs to be defined for the contract liability accounting date. The contract liability process does not generate accounting entries for the contract lines until you do one of these:

• Change the contract line's contract liability accounting date to fall within its accounting distribution's effective time period.

• Change the existing accounting distribution (or add a new one) to cover the time period of the contract line's contract liability accounting date.

For each fixed-amount contract line, the contract liability process creates a credit to the contract liability account that you specified for that contract line, and a debit to the Contract Asset account that you specified for that contract line.

Rate-based Contract Lines

Rate-based contract lines are not associated with contract liability because no known amount is associated with these types of lines. Revenue for rate-based lines is only recognized as work is performed.

Recurring Contract Lines

If you selected contract liability recognition for a recurring contract line, the contract liability accounting distribution is editable on that contract line's Accounting Distribution page. The GL Unit field populates with the PeopleSoft General Ledger business unit associated with the PeopleSoft Contracts business unit of the contract. PeopleSoft Billing handles the contract liability processing for recurring contract lines.

See Processing Contract Liability.

Amount-based Contract Lines

If a contract line's product is associated with a product group for which an contract asset distribution code is defined, the system writes that contract asset accounting distribution to the Accounting Distribution page for that contract line. The contract asset accounting distribution for a contract line is editable on the Accounting Distribution page. The GL Unit field is populated with the PeopleSoft General Ledger business unit associated with the PeopleSoft Contracts business unit of the contract. When you save the Accounting Distribution page, the system performs combination editing to ensure that the contract asset distribution that you specify is valid for the PeopleSoft General Ledger business unit. When PeopleSoft Contracts manages revenue, contract asset is debited when you credit either revenue or contract liability. Contract asset is credited when the bill is generated (PeopleSoft Billing debits AR). Contract asset is not used if PeopleSoft Billing manages revenue. Because contract asset is populated and depleted throughout the life of the contract line, its distribution on the Accounting Distribution page cannot be changed after the contract is activated. In addition, you can specify only one line of contract asset accounting distribution. The amount used to debit the contract asset account during revenue recognition may be different from the amount used to credit the contract asset account during billing if revenue and billing are separated on the contract. The revenue amount on the contract line is used to debit contract asset during revenue recognition and the billing amount is used to credit contract asset during billing. Additionally, since revenue plans and billing plans work independently, amounts used to debit and credit contract asset are also impacted by the number of events on the billing plans and revenue plans and the timing and amounts of those events.

For example: Best Customer Corporation is installing PeopleSoft Contracts and it wants to recognize all contract asset by business unit, except for contract asset from services. Best Customer Corporation sets up contract asset for all PeopleSoft Contracts business units. Best Customer Corporation also sets up contract asset for the services-related product groups. Best Customer Corporation does not set up any contract asset accounting distribution for product groups that are not related to services:

This table lists the results of combinations of PeopleSoft Contracts business units and product groups based on the previous setup:

When you select a product onto a contract line, the product's contract asset account information is stored on the contract line as a part of the contract line's accounting distribution. This ensures that the contract asset account information existing for a product at the time it was selected onto a contract line does not change, even if the contract asset information defined at the business unit or product group level is subsequently changed.

Rate-based Contract Lines

For rate-based contract lines, the contract asset is stored in two places to be used in these ways:

• Rate-based contract lines assigned to as-incurred billing plans use contract asset from the Accounting Rules page (As Incurred Accounting Distribution).

• Rate-based contract lines assigned to value-based billing plans use contract asset from two different locations.

  For billing, the system uses contract asset from the Accounting Distribution page. The revenue process uses the contract asset from the Accounting Rules page. The system uses contract asset from two different locations because the accounting rules accounting distribution is defined across the application by Projects ChartFields, whereas the accounting distribution is defined for amounts in a value-based billing plan for a particular contract line.

  Note: The contract asset values on the Accounting Distribution page come from either the product group or the contracts business unit. The system populates the values for the contract asset accounting distribution from the product group level first. If there is no value specified at that level, the system looks for the contract asset at the business unit level.