Revenue Recognition Setup

PeopleSoft Contracts enables you to capture revenue information on a contract and allocate amounts to specific contract lines within the PeopleSoft Contracts system. As part of this process, you need to structure the accounting information. You associate a product or service defined on a contract line with a revenue recognition method, manage when the conditions for recognizing the revenue have been met, and generate journal entries to enter the revenue into your General Ledger system.

Setting up PeopleSoft Contracts to recognize revenue consists of several steps. Some steps are general and others are contract specific. The contract-specific steps are discussed later in this topic.

At the system level, you:

• Select the revenue recognition method or contract liability overrides, if applicable.

• Select revenue plan templates, if applicable.

• Determine proration methods.

• Set up the Journal Generator (General Ledger) template.

• Set up distribution codes.

• Set up distribution rules and distribution sets.

• Associate distribution rules with PeopleSoft Contracts business units.

• Associate distributions sets with products.

At the contract level, you:

• Identify if revenue is separately managed from billing.

• Enter the total revenue amount for the contract.

• Allocate the total revenue amount across contract lines.

• For each contract line, verify the distribution ChartFields—revenue, contract liability, and the contract asset accounting.

• Create revenue plans, including specifying a revenue recognition method for each plan, and assign them to contract lines.

  Or, verify revenue plans created by revenue plan templates, if applicable.

Once you have completed the previous steps, you are ready to begin managing revenue recognition. To manage revenue recognition:

• Review or update events.

• Run the processes to pick up and distribute revenue for "Ready" plans and events and post the revenue to ledgers.