Prospective Accounting for Immaterial Price Changes

Use prospective accounting to reflect minor unit selling price changes for performance obligations.

Performance obligations can be recognized over a given time period or at a specific point-in-time. For these immaterial price changes, you can reflect the change in revenue for current and future periods by reallocating the unrecognized revenue on the open performance obligations of the contract. This doesn't impact the revenue that's already recognized.

Prospective Accounting for Over-Time Performance Obligations

Prospective accounting for immaterial price changes for over-time performance obligations is applicable only:

To data imported through third-party sources.
To over-time performance obligations with a satisfaction measurement model of Period and a satisfaction plan of Daily rates partial periods.
When the application identifies the performance obligations in a customer contract through performance obligation identification rules and not through a performance obligation template. When the application identifies the performance obligations through a performance obligation template, the application performs retrospective accounting on the customer contract.

If the price change is for only part of the service period, you must split the revenue line into two lines. In this case, the application:

Updates the original line with the revised plan dates and the existing unit selling price.
Sends a new line for the remaining period with the new unit selling price. This new line must be sent along with the Add-to contract attributes so that the line is added to the same customer contract.

This table shows the attributes and expected values you enter in the Revenue Basis Data Import file-based data import (FBDI) template when you create a revision line that triggers prospective accounting:

Attribute	Expected Value
Quantity Note: Revise this attribute only if you don't use the service duration as a separate attribute.	Revised line quantity
Unit Selling Price	Revised unit selling price of the line
Service Duration Note: Revise this attribute when the unit selling price applies to a specified service duration.	Revised service duration
Line Amount	Revised line amount
Plan Start Date	Revised plan start date
Plan End Date	Revised plan end date
Immaterial Change Option	Immaterial
Contract Revision Date	Value is either: Plan start date Plan end date (only when the plan end date is revised)

This table shows the attributes and expected values you enter in the Revenue Basis Data Import template when you create a new line because of a price change to the original revenue line, which triggers prospective accounting:

Attribute	Expected Value
Quantity	Quantity of the new line
Unit Selling Price	Unit selling price of the new line
Service Duration	Service duration of the new line
Line Amount	Line amount of the new line
Plan Start Date	Plan start date of the new line
Plan End Date	Plan end date of the new line
Add to Existing Contract	Y
Action Code for Adding New Line to Existing Contract	CREATE NEW PO
Immaterial Change Option	Immaterial
Contract Revision Date	Plan Start Date

Prospective Accounting for Point-in-Time Performance Obligations

Prospective accounting for immaterial price changes for point-in-time performance obligations includes immaterial changes in quantity, unit selling price, or the unit list price of an obligation with a satisfaction measurement model of Measure Quantity Satisfied or Measure Percentage Satisfied.

These changes apply to current and future periods only and don't impact the revenue that was already recognized. The changes are reflected from the contract revision date.

In addition, when you add a new point-in-time performance obligation to an existing contract, this addition is an immaterial change that triggers prospective accounting.

Prospective accounting for immaterial price changes for point-in-time performance obligations is applicable only:

To data imported through third-party sources.
To immaterial changes in quantity, unit selling price, or unit list price of an obligation with a satisfaction measurement model of Measure Quantity Satisfied or Measure Percentage Satisfied.
When you add a new point-in-time performance obligation to an existing contract.
When the application identifies the performance obligations in a customer contract through performance obligation identification rules and not through a performance obligation template. When the application identifies the performance obligations through a performance obligation template, the application performs retrospective accounting on the customer contract.

Attribute	Expected Value	Expected Value if New Line Added
Quantity	No change	Quantity of new line
Unit Selling Price	Revised unit selling price	Unit selling price of new line
Unit List Price	No change	Unit list price of new line
Line Amount	Revised line amount	Line amount of new line
Immaterial Line Option	Immaterial	Immaterial
Contract Revision Date	Date on which the contract revision occurred	Date on which the contract revision occurred
Add to Existing Contract	Not applicable	Y
Action Code for Adding New Line to Existing Contract	Not applicable	CREATE NEW PO

Attribute	Expected Value	Expected Value if New Line Added
Quantity	Revised quantity	Quantity of new line
Unit Selling Price	No change	Unit selling price of new line
Unit List Price	No change	Unit list price of new line
Line Amount	Revised line amount	Line amount of new line
Immaterial Change Option	Immaterial	Immaterial
Contract Revision Date	Date on which the contract revision occurred	Date on which the contract revision occurred
Add to Existing Contract	Not applicable	Y
Action Code for Adding New Line to Existing Contract	Not applicable	CREATE NEW PO

Attribute	Expected Value	Expected Value if New Line Added
Quantity	No change	Quantity of new line
Unit Selling Price	No change	Unit selling price of new line
Unit List Price	Revised unit list price	Unit list price of new line
Line Amount	Revised line amount	Line amount of new line
Immaterial Change Option	Immaterial	Immaterial
Contract Revision Date	Date on which the contract revision occurred	Date on which the contract revision occurred
Add to Existing Contract	Not applicable	Y
Action Code for Adding New Line to Existing Contract	Not applicable	CREATE NEW PO