Understanding Performance Liability Accounting

If you bill a customer before the performance obligation has been met, the system uses performance liability accounting. The system records the revenue and COGS amounts, if applicable, in a Performance Liability Account (PLA) or a COGS PLA, rather than the revenue and COGS accounts. The system uses the PLA and COGS PLA as intermediate accounts that hold the amounts until you recognize them.

Upon recognition of the revenue and COGS, the system debits the PLA for the original revenue and COGS amounts and credits the revenue and COGS accounts with the amounts recognized. If the amount recognized is different than the original revenue or COGS amounts, the system credits or debits the difference to the PLA adjustment account or the COGS adjustment account.

JD Edwards EnterpriseOne uses AAIs to determine which accounts to use for the performance liability and performance liability adjustment accounts.

See Setting Up AAIs for Revenue Recognition.

JD Edwards EnterpriseOne supports performance liability accounting in the following systems:

• JD Edwards EnterpriseOne Accounts Receivable

• JD Edwards EnterpriseOne Contract and Service Billing

• JD Edwards EnterpriseOne Advanced Contract Billing

• JD Edwards EnterpriseOne Sales Order Management

• JD Edwards EnterpriseOne Real Estate Management