Examples of Deferred and Non-Deferred Revenue Scheduling Rules

Revenue scheduling rules determine the number of accounting periods and percentage of total revenue to record in each accounting period for a transaction.

When you use deferred revenue scheduling rules, the Recognize Revenue process creates a single distribution per line that posts to an unearned revenue account. You later earn the revenue either when a contingency expires or by manually scheduling the revenue.

You can use deferred revenue scheduling rules only for invoices that are assigned the In Advance invoicing rule. If you use a deferred revenue scheduling rule with a single accounting period, Receivables recognizes the revenue in the period that you specify.

If you use a deferred revenue scheduling rule with multiple accounting periods, Receivables creates the revenue recognition schedule based on the rule, and the start date is determined by the accounting start date that you provide. If the accounting start date occurs in a closed accounting period, Receivables posts that portion of revenue into the subsequent open accounting period.

If you use a non-deferred revenue scheduling rule with multiple accounting periods, Receivables uses the schedule created by the Recognize Revenue process. If an accounting period is closed, Receivables posts that portion of revenue into the subsequent open accounting period.

The following examples illustrate revenue recognition with deferred and non-deferred revenue scheduling rules.

Revenue Recognition with a Deferred Revenue Scheduling Rule

This table illustrates revenue recognition on a $300 invoice with a 3-month deferred revenue scheduling rule and an original start date of February 2. In this example, all accounting periods are open.

Accounting Date	February	March	April	May
February 2	$100	$100	$100	$0
March 2	$0	$100	$100	$100

The February 2 row shows what the original revenue recognition schedule is if the revenue scheduling rule isn't deferred. However, because the rule is deferred, Receivables creates a single distribution line that posts to an unearned revenue account when you run the Recognize Revenue process.

You can then earn the revenue on this invoice, but you enter March 2 as the accounting start date. Receivables honors the original schedule, illustrated by the February 2 row, but ignores the original start date from the transaction and uses the March 2 accounting date that you entered. This shifts the schedule by one month, as illustrated by the March 2 row.

Revenue Recognition with a Non-Deferred Revenue Scheduling Rule

This table illustrates revenue recognition on a $300 invoice with a 3-month non-deferred revenue scheduling rule. In this example, February is at first open, but is later closed before you can finish adjusting the invoice revenue.

Accounting Date	February	March	April	May
February 2	$100	$100	$100	$0
March 2	$0	$200	$100	$0

The February 2 row shows the original revenue recognition schedule that Receivables creates when you first run the Recognize Revenue process. At this stage, February is open.

You then discover that the schedule was incorrect, so you unearn and then correctly re-earn the invoice revenue. When you re-earn revenue on invoices with non-deferred revenue scheduling rules, Receivables uses the original schedule, as illustrated by the February 2 row.

But because February is now closed, Receivables posts the February allocation to March, as illustrated by the March 2 row.