Combined Revenue Arrangements
You can combine the revenue elements and arrangements from multiple sources that are part of the same performance obligation. When you merge revenue elements from multiple sources, you create a single arrangement to manage revenue allocation and recognition. This type of merge is sometimes called a retrospective merge, or simply a merge, to contrast with the prospective merge type of merge. See Prospective Merges.
Original revenue arrangements are preserved after merge, but they no longer include revenue elements and revenue plans that were merged into the new arrangement. These original arrangements preserve the original history and audit trail. The Merged into New Arrangements boxes on the original arrangements are checked. The individual revenue element records include a Merge Arrangement History subtab. This subtab includes links to the arrangements the element has been merged to and from with the dates of the merges. It also includes a link to a snapshot of the pre-merge revenue arrangement.
The new revenue arrangement created from a merge includes the selected revenue elements from the original revenue arrangements. The Created from Merged Arrangements box in the new revenue arrangement is checked. Accounting preferences that indicate to use the source date for the revenue arrangement do not apply to merging. The date of the new revenue arrangement is the date you set in the Revenue Arrangement Date field when you create the merge.
Revenue is automatically reallocated when you merge. You can preview the results of merging revenue arrangements to see what the result will be if you proceed. Revenue recognition plans are automatically updated when the merge is complete unless automatic updates are turned off. If your Revenue Plan Update Frequency accounting preference is set to Manual, you must update revenue plans manually after the merge.
The Allocated Contract Acquisition Cost Amount (Base Currency) value, which is included when the Enable Advanced Cost Amortization accounting preference is checked, is not reallocated. This value remains the same for individual revenue elements when the elements are merged into a new arrangement. To reallocate costs after the merge, use the Reallocate Cost button on the new revenue arrangement. For detailed information, see Contract Acquisition Cost Allocation.
Do not retrospectively merge revenue arrangements that were created from a prospective merge. This use case is not supported.
For instructions to combine revenue arrangements, see Merging to Combine Revenue Arrangements.
The following diagram shows the records involved in a retrospective merge.
Multiple Currencies and Retrospective Merges
If the Multiple Currencies feature is enabled, you may include revenue elements with different exchange rates in a combined revenue arrangement. When you merge revenue elements with different exchange rates, the Plan Exchange Rate on the updated revenue plans is recalculated. All resulting revenue plans in the revenue arrangement have the same plan exchange rate. The plan exchange rate equals the Amount on the revenue plan divided by the Revenue Amount on the linked revenue element. The revenue element displays the exchange rate from the source transaction, which is different from the plan exchange rate after the merge.
The following table shows an example of the calculation of plan amounts and plan exchange rates for a merge. The revenue amount in base currency is the plan amount.
|
|
Before Merge |
After Merge |
||||||
|---|---|---|---|---|---|---|---|---|
|
|
Discounted Sales Amount (FX) |
Fair Value |
E |
Discounted Sales Amount (Base) |
Revenue Amount (Base) |
Revenue Amount (FX) |
Plan Amount (Base) |
Plan Exchange Rate |
|
Sales Order 1 E |
£100 |
100 |
2 |
$200 (£100 × 2) |
$400 |
£100 |
$400 ($1,200 × £100 ÷ £300) |
4 ($400 ÷ £100) |
|
Sales Order 2 E |
£200 |
200 |
5 |
$1,000 (£200 × 5) |
$800 |
£200 |
$800 ($1,200 × £200 ÷ £300) |
4 ($800 ÷ £200) |
|
Total |
£300 |
|
|
$1,200 |
$1,200 |
£300 |
$1,200 |
|