Allocating VSOE Revenue for a Bundle

As you sell bundles, it is the vendor-specific objective evidence (VSOE) value of the items, not the sale value, that is the revenue amount recognized for the sale. Allocation is the process used to determine the amount recognized for each item in a bundle. The total VSOE amount allocated always equals the sales amount of the transaction bundle (or the item group if you are using item groups for VSOE).

The VSOE allocation amount for a sale can be calculated automatically by checking the Auto-calculate VSOE box on a transaction. The VSOE price allocated to member items is determined by the VSOE settings on each item record and the delivery status of the item. Allocation amounts also can be calculated manually. See Manual Calculation of VSOE Allocations. You also can allocate VSOE using custom code. See SuiteScript Client Scripts for more information.

Important:

After a VSOE bundle is invoiced, the allocation amounts cannot change. For example, you enter a sales order with three items. Only two of the items are marked delivered for VSOE and are eligible to have their allocated value recognized. After invoicing the sales order, you mark the third item delivered for VSOE. Marking the item delivered after invoicing does not impact the VSOE allocation. None of the VSOE settings impact the VSOE allocation after the order has been invoiced. Only the delivered flag may be checked after invoicing to start the revenue recognition process.

The VSOE value allocated to bundle member items is determined by the following:

Revenue recognition settings on each item record
VSOE settings on each item record
Delivery status of the items
Transaction-level and line-level discounts

For example, a VSOE transaction bundle includes the following:

Item	Invoice price	VSOE Price	VSOE Allocation	Delivered?	Deferral
Installation Service 202	$1500	$1000	$1000	Yes	Defer Until Item Delivered
Software Product 101	$1500	$2000	$2000	Yes	Defer Until Item Delivered
Software Product 103	$2500	$2500	$2500	Yes	Defer Until Item Delivered
Total	$5500	$5500	$5500

NetSuite allocates the VSOE price of all items in this bundle based on their deferral settings and delivery status. All items in the bundle are set as Defer Until Item Delivered AND all items are marked as delivered.

Because the total invoice amount of the bundle items is equal to the total VSOE price, the VSOE allocation for each item is the VSOE price of each item. The total VSOE amount allocated for this sale is $5500.

For more examples of VSOE allocation, see VSOE Revenue Recognition Examples.

VSOE Allocation and Currencies

If you use NetSuite OneWorld and have enabled both the VSOE and Multiple Currencies features, when you enter a transaction using a currency other than the base currency, the VSOE price and allocation are calculated based on the foreign currency, not the base currency. The VSOE allocation is performed using the converted VSOE price or sales amount.

Manual Calculation of VSOE Allocations

You can set an accounting preference to indicate that VSOE allocation should be calculated manually.

To indicate that allocations should be calculated manually:

Go to Setup > Accounting > Accounting Preferences.
On the General subtab, scroll down to Revenue Recognition section, and clear the Allow Users to Modify VSOE Values on Transactions box.
Click Save.

VSOE Allocation and Currencies

Manual Calculation of VSOE Allocations

To indicate that allocations should be calculated manually:

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