Guidelines for Recognizing Revenue in the Transaction Currency

When evaluating whether to recognize revenue in the transaction or accounted currency, keep these tips and considerations in mind:

• If you're unsure which approach will work best to achieve your revenue policies, you can run a test data set of contracts in a test environment, and then switch the setting and discard and reprocess the contracts. This enables you to compare the accounting results between the two different approaches and decide which is more aligned with your needs without impacting your existing contracts, because the change is only applied to new and unprocessed lines. Contracts created before you begin using this approach will continue to be processed under the original method you were using until the end of their life cycle or when you discard the contracts.
• If a contract has undergone an immaterial change and then later receives a transaction that's dated earlier than the immaterial change date, the transaction is applied as a current-dated transaction against the current contract value.
• For nonmonetary performance obligations:
  • The application uses the conversion rate as of the established initial performance event date. Once the initial performance event date is established, this rate is used to convert the contract liability distributions for the life of the performance obligation.
  • The conversion rate doesn't change due to receiving an earlier dated billing or satisfaction event.
• Ledger and nonledger currency-denominated revenue contracts that have previously undergone an immaterial change action aren't eligible for processing by the Discard Customer Contracts process.
• Returns are processed as material changes. The transaction is reflected and converted as of the transferred source document line date or if blank, the system date.
  • This date is used as the rate date when the performance obligation is monetary.
  • The application creates a negative satisfaction event to undo any recognized revenue for the returned item and the revenue converted using the conversion rate for that date.
  • The corresponding applicable credit memo is converted as of the credit memo date.
• Performance obligations: Performance obligations created from templates are treated as monetary.