Working with Variable Revenue Recognition Schedules

Note:

This topic applies to the Revenue Recognition feature. Revenue Recognition is the key feature of NetSuite classic revenue recognition. Classic revenue recognition features are not available in new NetSuite implementations. Classic revenue recognition (also called legacy revenue recognition) is still supported for customers who previously enabled it. NetSuite currently offers the Advanced Revenue Management (Essentials) feature to automate revenue deferral and recognition. For information about the current feature, see Advanced Revenue Management (Essentials) and (Revenue Allocation).

Variable revenue recognition schedules show both estimated revenue amounts for future periods and actual recognized revenue posted by revenue recognition journal entries. Variable schedules can be used with fixed bid projects created using Project Management. Fixed bid projects have a project total amount based on the planned time entries for the project. Forecasted revenue amounts for the project are based on the total planned time for the project.

When you select a variable revenue recognition template on an item line, you must also select the association project in the line’s Customer column.

Note:

A Billing Type is not required for the variable revenue recognition schedule to forecast revenue amounts. Variable schedules calculate estimated revenue for future periods only when a project has planned time entries. For example, if you attach a variable schedule to a project that is not a fixed bid project, such as Time and Materials, forecasting is ignored because the total amount of the project cannot be determined.

The variable revenue recognition schedule displays additional columns that are not included in a standard schedule: % Amort. in Period and % Total Amort. A schedule line with a journal number and an amount in the Total Recognized column represents recognized revenue. Forecast lines do not have a journal number or an amount in the Total Recognized column and % Total Amort. columns. Forecast lines cannot be edited in a variable revenue recognition schedule.

If you run revenue recognition more than one time for a period, you get a line on the revenue recognition schedule for each revenue recognition journal entry created. Rerunning revenue recognition does not aggregate the recognition amounts into one journal entry. The new revenue recognition journal entry amount is the additional or change in revenue recognized for the period from the previous journal entry.

Important:

Always create revenue recognition journal entries in chronological order when using percent-complete revenue recognition for projects.

Revenue recognition forecast amounts can be calculated after a project is attached to a sales transaction or to an item on a sales transaction. When you initially create a sales transaction for a project, the revenue recognition schedule amounts for a project are calculated as follows:

Total Revenue Amount x (Planned Time Entries for the Period / Total Planned Time Entries for the Project)

For example, a $14,250 project has planned time for September and October but no work has been completed yet. The revenue recognition forecast amount lines based on the planned time entries are as follows:

Posting Period	Journal	Amount	% Amort. in Period
Sep 2015	- None -	10,050.00	70.5263%
Oct 2015	- None -	4,200.00	29.473%

The Date Executed, Total Recognized, and % Total Amort. columns are empty.

When you run Create Revenue Recognition Journal Entries, the processes does the following:

Creates the revenue recognition journal entry for the variable revenue recognition schedule. This amount is calculated as the Current Project Completion amount minus the amount of project completion as of the last time revenue recognition was run.
Updates the estimated or forecast revenue amounts on the schedule for future periods based on the planned time remaining for the project. Forecast lines do not have information for Date Executed, Journal, Total Recognized, and % Total Recognized.

As work on the project occurs, the Create Revenue Recognition Journal Entries process is run two times in September and one time in October. Work is for the project is 100% complete when the October journal entry is generated. The amount lines for the fully recognized project revenue are as follows:

Posting Period	Date Executed	Journal	Amount	Total Recognized	% Amort. in Period	% Total Amount
Sep 2015	9/20/2015	1	4,650.00	4,650.00	32.6316%	32.6316%
Sep 2015	9/30/2015	2	1,800.00	6,450.00	12.6316%	45.2632%
Oct 2015	10/31/2013	3	7,800.00	14,250.00	54.7368%	100.0%

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