Setting Up Contract Liability Accounts

Use these procedures to enable contract liability accounting and to enable contract liability recognition (optional).

To enable contract liability accounting:

  1. Ensure that a detail calendar exists for the primary ledger group that is associated with the general ledger business unit.

    Use the Ledgers For A Unit - Definition page to set up as many detail calendars as you need to accommodate any combination of accounting periods that you need. Use the same detail calendar as a reference for the Journal Generator that you use for contract liability distribution.

    Ensure that the detail calendar includes a period for the oldest transaction that you want to enter. After installing the PeopleSoft system, you may want to make this earliest date more restrictive.

    Note: If you enable the contract liability recognition feature, you must define detail calendars far enough into the future to accommodate any deferred accounting period that you need to use.

  2. Enable contract liability, and select a proration method in billing installation options on the Installation Options - Billing - Integration Options page.

    Set the default level to system, business unit, or bill type. In the Contract Liability Options group box, select the Enable Contract Liabilitycheck box, set the future period accounting dates parameter, and select a proration method.

    If you define the GL options at the business unit level (meaning you selected the Business Unit radio button on the Installation Options - Billing - Integration Options page), select Enable Contract Liability, and define the Future Period Accounting Dates parameter on the Billing Definition - Business Unit 2 page.

    If you define GL options at the installation level (meaning you selected the System radio button on the Installation Options - Billing - Integration Options page), select Enable Contract Liability and define the Future Period Accounting Dates parameter on the Installation Options - Billing - Integration Options page.

    If you define the GL options at the bill type level (meaning you selected the Bill Type radio button on the Installation Options - Billing - Integration Options page), select Enable Contract Liability and define the Future Period Accounting Dates parameter on the Bill Type 2 page.

    Note: The Enable Contract Liability Flag option is available for entry only if, in the GL Options group box on the Installation Options - Billing - Integration Options page, you select the value BI Creates GL Acct Entries (Billing creates general ledger accounting entries). If the GL Options are at the system level, the deferred parameters are available for entry on this page.

To enable contract liability recognition (optional):

  1. Set up contract liability distribution codes on the Distribution Code page.

    Contract liability distribution codes simplify the process of generating accounting entries by defining a valid combination of ChartField values.

  2. Relate deferred distribution codes to revenue, discount, or surcharge codes on the Distribution Code page.

    Deferred distribution codes–Contract liability, deferred discount, and deferred surcharge–can be related to regular distribution codes–revenue, discount, and surcharge–overlaying any previously defaulted deferred distribution information. When you enter a revenue, discount, or surcharge distribution code related to a deferred distribution code, the system automatically assigns the deferred distribution code and its associated ChartFields.

    Note: This automatic override occurs only if the bill line is subject to deferred accounting.

    For example, if a bill line is subject to contract liability recognition, the default deferred accounting distribution information comes first from the bill type. If you assign the regular account distribution to distribution code ID REV W/DFR (distribution identification code revenue with contract liability), the distribution ID DFR REV (distribution identification code contract liability) overrides the deferred account distribution information.

  3. Create contract liability defaults.

    Use the Billing Options - Billing Business Unit Options page to set the business unit level default for the deferred distribution code, and use the Bill Type 2 page to set the default contract liability options at the bill type level.

  4. Establish default revenue recognition basis.

    The revenue recognition basis takes its default value from either the bill type or the charge identifier level. Access the Bill Type 2 page to establish the default revenue recognition basis at the bill type level. Access the Charge Code page to establish the revenue recognition basis at the charge identifier level.