Unbilled Receivable Adjustment
The unbilled receivable adjustment posts revenue recognized in advance of billing to an unbilled receivables account to record the contract asset. The deferred revenue reclassification process reverses prior unbilled receivable adjustments before calculating the current contract asset, if any.
The accounting preference Unbilled Contract Asset account determines which asset account the system uses for the unbilled receivable adjustment.
When cumulative billing is less than cumulative revenue recognition, the adjustment debits the selected contract asset account and credits the appropriate deferred revenue account. When cumulative billing is greater than cumulative revenue recognition, no new unbilled receivable is needed. You may, however, see an unbilled receivable adjustment to reverse a prior adjustment.
The Related Records subtab of revenue arrangements displays the same link type for unbilled receivable adjustments and their reversing adjustments.
The memo for detailed unbilled receivable adjustment journal entries includes the phrase "Total Recognized After FX Adjustment." This phrase refers to the fact that the recognized revenue is cumulative. It does not mean that a foreign currency adjustment has been generated.
Two accounting preferences may significantly affect calculations for contract assets:
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Unbilled Receivable Adjustment Journal Grouping – enables you to present contract assets and contract liabilities on a net basis in accordance with ASC 606-10-45-1. The preference is book specific. When Multi-Book Accounting is enabled, the preference appears on the accounting book record instead of the Accounting Preferences page.
The unbilled receivable adjustment may occur separately for each revenue element, for the combined revenue arrangement, or for a group of elements within the arrangement. The choice is controlled by this accounting preference. For details, see Groupings for Unbilled Receivable Adjustment Journal Entries.
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Exclude Contract Assets from FX Reclassification – affects only revenue arrangements that are in a foreign currency. It controls whether foreign currency revaluation for contract assets occurs during deferred revenue reclassification.
This preference is clear by default. If the box is clear, you cannot check it. When the box is clear, NetSuite includes foreign currency revaluation for the contract asset account in the reclassification process. The reclassification process uses the period-end currency exchange rate of the posting period to calculate contract assets. Reclassification creates an adjustment for foreign currency gain or loss on contract assets when a variance occurs. For information about the adjustment, see Foreign Currency Gain or Loss on Contract Asset.
When the box is checked, reclassification does not include foreign currency revaluation for the contract asset account. The system records the exchange rate used by the first unbilled receivable adjustment journal entry for each revenue element. This fixed exchange rate is used to calculate all subsequent unbilled receivable adjustment journal entries for the revenue element. Any unrealized gain or loss due to exchange rate fluctuation is included in the period-end foreign currency revaluation for the unbilled receivables account. Deferred revenue balances may remain for foreign currency transactions after all revenue is recognized.
If you clear the box for this preference, you cannot check it again.
If the quantity on a revenue element is null and the source is a journal entry, the revenue element is treated as fully billed. A negative amount is treated as fully credited. For more information, see Creating Revenue Elements from Journal Entries.