Cost of Goods Sold Recognition

You can recognize the associated cost of goods sold in proportion to the revenue recognized in Oracle Fusion Receivables or Oracle Fusion Revenue Management. The Analyze Product Gross Margins page shows the recognized and unrecognized revenue and cost of goods sold.

To transfer the revenue recognition from Receivables, perform these steps.

Run the Import Revenue Lines process for the business unit from the Scheduled Processes work area.

This transfers the final accounted revenue lines from Receivables. Ensure that you select the number of workers, the import as of date, and the start date. Revenue lines with accounting date between the start date and the import as of date, including both dates, are transferred.

If you don't set the import as of date, it defaults to the system date. If you don't set the start date, then the revenue lines with accounting date between the start of the previous or current open period and the import as of date are transferred.
Run the Create Cost Accounting Distributions process with the Cost of Goods Sold processor option checked.

The percentage of revenue recognized is identifies by matching the revenue lines to the shipment lines. This percentage is used to recognize the cost of goods sold for the same proportion.

Revenue Recognition % = Recognized Revenue / Total Revenue

The transaction date of the cost of goods sold recognition is the accounting date of the revenue line. The accounting date is either the transaction date or the cost date of the original sales order issue, whichever is later.

For ship-only sales orders, the transaction date of the cost of goods sold recognition is the shipment date. However, if you want to use the order line closed date as the transaction date for cost of goods sold recognition, then you can add the Use Order Line Close Date for Cost of Goods Sold Recognition profile option in the Manage Profile Options page and then set this option in the Manage Costing Profile Options page from the Setup and Maintenance work area.

To avoid accounting date discrepancies between revenue and cost of goods recognition, first close the period in Receivables, then the period in Cost Management, and lastly the General Ledger period. However, if the transaction date of the cost of goods sold recognition falls in a period that's already closed, the cost of goods sold recognition is automatically posted in the next open period.

The cost of goods sold recognition differs based on the type of sales order. This table summarizes the costs of goods sold recognition for the different sales order types.

Sales Order Type	Cost of Goods Sold Recognition
Ship-only sales orders	Ship-only sales orders aren't invoiced. Therefore, the cost of goods sold recognition is always at 100% and occurs at sales order issue.
Ship and bill sales orders	Cost of goods sold recognition is created for the item or items that are shipped. The percentage of recognition is derived from the invoice revenue lines that are matched to the shipment lines.
Bill-only sales orders	In this case, there are no shipments but the Analyze Product Gross Margin page displays the revenue information.
Internal drop ship	Cost of goods sold recognition is created for the Trade Sales Issue in the customer-facing business unit.

Note: The Review Cost Accounting Distributions page shows details such as the recognition percentage, reference type, reference number, and costed date for the COGS Recognition transactions. However, to view the relevant cost information, search for the Sales Order Issue transaction with the corresponding reference number.