Generating Profit Recognition Data for Revenue Performance Obligations
Run the Profit Recognition Build (R51800) to calculate actual and budget amounts, projected final values, and percent complete. In final mode, the system also generates records in the Profit Recognition table (F5144) and Profit Recognition Account Balance table (F5145). To run the Profit Recognition Build (R51800) at RPO level, you must enter 4 (Revenue Performance Obligation level) in the Summarization Level processing option.
See Setting Processing Options for Profit Recognition Build (R51800)
The system compares the value in the Threshold processing option with the percent complete of each RPO separately and validates the Recognition Threshold Percent for an RPO, which controls when to start recognizing profit for this RPO. To review when the system starts recognizing profit for an RPO, review the following section:
Generating Profit Recognition Data
The system uses the Subledger and Subledger Type fields to store the RPO number in the F5144 and F5145 tables. Subledger type P refers to the RPO number. The system reviews whether the adjustments for revenue, cost, and percent complete were made at the job level or at the RPO level, and accordingly posts profit recognition records to either the accounts at the job level or to the accounts at the RPO level.
If you have a job that is being worked on before the FASB/IASB Revenue Recognition 2014 standard goes into effect, you can run Profit Recognition at the job or project level for this job. If, when the new standard goes into effect, the job is still active and you need to recognize revenue at a different summarization level (which could be by project, job, RPO or subledger), you can run the R51800 report at the new level.
In order to rerun the R51800 report at a different summarization level, you must first mark the existing records as obsolete. To do so, you run the Obsolete Profit Recognition Records report (R51446).
Generally, there is a constraint in place that prevents this, but in the transitory time between standards you may want to change the way you run Profit Recognition. There may also be times after the FASB/IASB Revenue Recognition 2014 standard goes into effect that you may also need to change the level of summarization because of changes in a contract(s) and identified performance obligations with your customer(s).
You can regenerate profit information for closed periods when adjustments are needed. The system displays an error message when re-opening prior closed fiscal periods, after the journal entries have been created for that fiscal period for the given RPO. The system displays this error to specify that the records need to be regenerated so that RPO-to-date balances are correct in the F5144 table.
The system stores a history version of the information in Profit Recognition History File (F5144) with the same generation date and financial information stored at RPO level.