Defining a Revenue Recognition Rule
The revenue recognition rule defines the terms of the revenue recognition plan that is created from the revenue element when an item is sold. The default revenue recognition rule for a revenue element is set on the Revenue Recognition/Amortization subtab of the item record.
To define a revenue recognition rule:
-
Go to Revenue > Non-Transaction Revenue Recognition Records > View Revenue Recognition Rules > New to open the Revenue Recognition Rule page.
-
In the Name field, enter a name for the rule. Revenue recognition rules must have unique names.
To help identify rules when they appear in list fields, you can include short forms of key terms of the rule in the name.
-
In the Recognition Method field, select a method to specify the terms for posting revenue.
-
For descriptions of the available methods, see Recognition Methods.
-
For examples of how straight-line methods work, see Straight-Line Revenue Recognition Examples in Advanced Revenue Management (Essentials).
-
If you select Custom, you must manually specify period offsets and amount percentages in the columns in the lower portion of the page. The columns are available only when you select Custom as the method.
-
Period Offset – Specify the number of periods to postpone the start of the recognition plan for this line. The first period to recognize has an offset of zero.
-
Amount Percentage – Enter the percentage of revenue amount to recognize.
-
Click Add.
Repeat the steps above until the total in the Amount Percentage column equals 100.
-
-
-
Select an Amount Source to determine how the amount for the revenue recognition plan is derived. For a description of the options and their results when combined with other revenue recognition options, see Amount Sources.
-
Select a Rev Rec Start Date Source to determine the source of the initial start date on the revenue recognition plan. The actual start date can be changed in the plan if revenue has not yet been recognized. For a description of the options, see Rev Rec Start Date Sources.
-
Select a Rev Rec End Date Source to determine the source of the default end date on the revenue recognition plan. The actual end date can be changed in the plan. For a description of the options, see Rev Rec End Date Sources and End Date Change Impact.
-
When you select Rev Term in Months, you must enter a number in the Term in Months field.
-
When you select Rev Term in Days, you must enter a number in the Term in Days field.
-
When you select Recognition Period, you must enter a number in the Recognition Period field.
-
-
Optionally, edit the End Date Change Impact field, and enter values in the Period Offset or Start Offset fields and the Initial Amount field. For complete descriptions of these fields, see Revenue Recognition Rule Field Reference.
-
Optionally, check the Inactive box. You can save the rule, but it will not appear as an option in lists.
-
Select a Reforecast Method to use for forecast plans. For a description of this field and its options, see Reforecast Method.
The accounting preference Default Reforecast Method determines the default for this field.
-
If you select Manual as the Reforecast Method, enter a positive integer in the Recalculation Adjustment Period Offset field. This field is read-only when you select any other method.
-
-
Click Save.
To use the revenue recognition rule, select it in the Revenue Recognition/Amortization subtab of an item record. For more information, see Item Configuration for Advanced Revenue Management (Essentials) and (Revenue Allocation).
To view a list of revenue recognition rules, go to Revenue > Non-Transaction Revenue Recognition Records > View Revenue Recognition Rules.