SAP has introduced enhancements to SAP Business ByDesign to allow customers to comply with accounting standard IFRS 15/ASC 606 revenue recognitions requirements. The series of case documents introduces the key requirements of IFRS 15 /ASC 606 along with steps to be taken by the client to implement the new functionality.
This special topic document focuses on:
- When a RAC is created or inherited from a predecessor document
- What the implications are
There are multiple means to create a sales document based on referencing to a preceding sales document by means of copy, create a follow up or creation using a template.
From an IFRS15/ASC5606 standard, it is necessary to evaluate each time, when using one of those features, to assess whether the new created sales document represents a new Revenue Accounting Contract or extends an existing Revenue Accounting Contract.
Default Behavior in SAP Business ByDesign
New Revenue Accounting Contract
When a sales document is newly created a new RAC Revenue Accounting Contract is created by default.
- New Sales Order
- New Customer Contract
- Create New Customer Contract from Contract Template
In case the new sales document needs to be assigned to an existing RAC the defaulted new RAC can be removed and the new sales document assigned to an existing RAC. By this the existing RAC will be extended by new POB (performance obligations) from the new sales document and the existing allocation base will be adjusted.
Inherited Revenue Accounting Contract from predecessor sales document
In following scenarios, the RAC is, by default, always inherited from the sales document the action has been triggered from:
- Copy from Sales Order
- Copy from Customer Contract
- Create follow up sales order from customer contract
- Automatically generated customer contract from sales order item with item type ‘entitlement’
- Create with reference Sales Order
This means, in case you execute one of the actions mentioned, it is assumed, at first, that the existing RAC is to be extended by new POBs. When releasing the new sales document, the allocation base will be recalculated. It will impact existing realizations with the next revenue recognition run. The applied changes are handled in a retrospective manner according to IFRS15/ASC606.
In case you would like a NEW RAC to be created, please proceed as follows:
- Trigger one of the actions mentioned above.
- Remove the proposed RAC
- Press “new RAC”
- All items will be defaulted with new POBs
- Optionally: Please consider to trigger a recalculation of the price conditions in case the ‘copied prices’ do not reflect the current price and discount lists that form the basis of the standalone selling price.
This is also required in case the price tables have changed in the meantime. Otherwise, the default SSP will be derived from pricing tables as valid at release of the copied sales document.