Revenue Recognition for Additional Satisfaction Events

You can define rules to recognize revenue based on specific conditions or contingencies such as customer acceptance, proof of delivery and payment received.

Revenue Management recognizes revenue primarily based on satisfaction events such as fulfillment and the passage of time. However, when you want to only recognize revenue when primary and additional events are satisfied, you can define these events and conditions in the Create Additional Satisfaction Event Rule page.

The two types of satisfaction events differ in the following ways:

• Primary satisfaction event: the fulfillment of a performance obligation is based on the terms of the contract.
• Additional satisfaction event: the fulfillment of a performance obligation is based on additional events such as customer acceptance, proof of delivery, or payment as dictated by the internal revenue recognition policies of the business.

An additional satisfaction event is assigned to a performance obligation based on the configuration in the Create Additional Satisfaction Event Rule page. When the application creates a performance obligation, it applies rules and assigns additional satisfaction events based on these rules. The application doesn't recognize revenue until the assigned additional satisfaction events are fulfilled.

You can import the fulfillment of additional satisfaction events using the VRM_SOURCE_DOC_ADDL_SUBLINES tab in the Revenue Basis Data Import template. Run the Validate Customer Contracts process to validate the additional satisfaction event data. You can view and correct validation and data errors using the Correct Contract Document Errors spreadsheet.

After importing the fulfillment of your additional satisfaction events, the Validate Customer Contract Source Data process validates the additional sublines and displays any errors in the output. Correct any errors and import the revised additional sublines.

In the case of a contract modification, the application reevaluates and assigns the additional satisfaction events to all the revenue lines of the contract based on the additional satisfaction event rules. Similarly, for returns, the revenue lines are reevaluated for the additional satisfaction event rules.

The additional satisfaction events are assigned to each promised detail line. You can view information on your additional satisfaction events in the Edit Customer Contract page in the Performance Obligations tab and the Promised Details tab:

• Performance Obligations tab
  • Additional Satisfaction Event column: indicates whether the performance obligation or any line of the performance obligation has at least one additional satisfaction event assigned to it.
  • Satisfaction Status of Additional Event column: indicates the satisfaction status of all the additional events on the performance obligation. Expected values are Fully satisfied, Extent satisfied, and Not started.
• Promised Details tab
  • Additional Satisfaction Event: indicates whether the promised detail line has at least one additional satisfaction event assigned to it.
  • Satisfaction Status of Additional Event: indicates the satisfaction status of all the additional events assigned to the promised detail line. Expected values are Fully satisfied, Extent satisfied and Not started.
  • Additional Satisfaction Events subtab in the Details section: displays summary and detail information about the additional satisfaction event.