Journal Entries for Percent-Complete Revenue
The Create Revenue Recognition Journal Entries page includes revenue due to post from percent-complete revenue recognition plans based on project completion.
Always create revenue recognition journal entries in chronological order when using percent-complete revenue recognition for projects.
For the period you select, NetSuite determines the amount due to be recognized for each plan based on project completion. Project completion is calculated based on entered and approved project time entries. The project record shows the percentage of completion for the project in that period. That percentage determines the revenue due to post.
A percent-complete revenue plan does not show in the list if:
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It has a zero balance to recognize for the selected period.
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The revenue plan is on hold.
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Revenue recognition journal entries have been created for the period, and the planned or actual time worked for the project has not changed since then.
Revenue recognition journal entries typically debit a deferred revenue account and credit a revenue account. In some cases, however, a journal entry may decrease the revenue recognized. In these cases, the revenue recognition journal entries credit a deferred revenue account and debit a revenue account.
For example, the time estimate to complete project Alpha is 100 hours. During period One, 50 hours are logged for project Alpha. 50 hours = 50% of completion and 50% of the project revenue is recognized.
Then during period Two, the time estimate is increased to 200 hours. The 50 hours logged against the project now equals 25% completion, and the revenue recognized needs to be decreased. NetSuite generates a journal entry that credits the deferred revenue account and debits the revenue account to correct the amount of revenue recognized previously. On the percent-complete revenue recognition plan, the journal entry line displays a negative amount.
The revenue recognition plans coordinate the recognition of deferred revenue with the stages of completion of an associated project. As work is logged and portions of the project are marked complete, journal entries become due to post to recognize the related revenue. If the Percent Complete Override subtab on the Financial subtab of the project record is populated, revenue recognition plans are affected. For details, see Using the Percent Complete Override Subtab.