Product Information
Revenue Recognition for Project Sales(Time and Material) in SAP Business ByDesign
In this blog post I have explained how the Revenue is Recognized for the Revenue type ‘Project Sales(Time and Material)’ when the accrual method is “Recognize at the point of delivery”.
Project sales include the sale of project-based services and Material but it does not includes the sale of standardized material and services.
Prerequisites
Navigate to Business Configuration > Choose the First Implementation > Click on Edit Project Scope > Under third Step Scoping Make sure that Sell Project-Based Products and Services is in Scope
Figure1:Scoping
Under Fourth step Questions > Enable the question “Do you want to use Solution-Supported Revenue Recognition for sales orders?”.
Figure2:Enable the question
Navigate to Business Configuration > Select the First Implementation > Click on Open Activity list > Search for Accrual Method Determination Activity > Assign the accrual method for the Revenue type Project sales(time and Material) .
Figure3:Accrual method Determination
Process flow
Navigate to Sales order Workcenter > Create a new sales order by entering all the mandatory details . Under items tab add the Project Based Material and Services and click on Save.
Figure4:Create Sales Order
Create a Project from the sales order and ‘Create Project’ field will be enabled only if we add the Project-Based Material and Services in the sales order.
Figure5:Create Project
Enter all the mandatory details and click on ok
Figure6:Enter mandatory details
Project is Created and it is linked to the Sales Order
Figure7:Project is linked to the sales order
Release the Sales Order
Figure8:Release the sales order
Navigate to Project Management workcenter > Open the Created Project > Add the team member and Edit Period Plans for the Service under Work tab.
Figure9:Added team member
Enabled ‘From Stock’ indicator as I’m going to consume it from own stock for the Material under Materials tab.
Figure10:Enabled From Stock indicator
Released the project task
Figure11: Release the Project Task
Created project stock order for the Material under Products tab.
Figure12:Create Project Stock Order
Choose the Ship From Location and click on finish
Figure13:Choose ship from location
Navigate to Outbound Logistics control Workcenter > Search for Created Project Stock Order > Release the Project Stock Order demand
Figure14:Release the Project Stock order Demand
Navigate to Outbound Logistics Workcenter > Delivery Proposal > Search for Project Stock Order > Allocated Material to the Project by clicking on Allocate button.
Figure15: Allocate material to the project
Choose the Source Logistics area and click on Save
Figure16:Choose the Source Logistics area
Figure17: Consume the material to the Project
By logging into the Employee user, Edit and release the timesheet for the employee
Figure18:Edit and release the timesheet for the employee
Actual quantity for the material and Service is updated in the Project .
Figure19:Actual quantity for the Material and Service
We can see the Journal entry posted for Internal Service Confirmation and Goods Issue for consumption where Cost of sales of Material and Services are posted to the Deferred Costs account. This account is a balance sheet account, which means that the costs are not yet recognized.
Figure20:Goods issue for consumption
Figure21:Internal Service Confirmation
Navigate to Cost and Revenue Work Center > Search for Sales Order > Execute Revenue Recognition for sales order before doing Customer Invoice and click on ok
Figure22:Execute Revenue Recognition
Enter all the Mandatory Details and click on Ok
Figure23:Enter the Mandatory details
Here we can see the Journal entry, the run posts recognized revenue from the deferred net value account to the sales revenue account and deferred cost of sales account to the corresponding expense accounts.
Figure24:Journal entry for Revenue Recognition
Navigate to Project Management Work Center > Search for Created Project > Create a project invoice request
Figure25:Create Project Invoice request
Propose invoice items using sales order items Under third step, then it will propose the line items which are associated in the sales order.
Figure26:View of Project Invoice Request
Check the project invoice request for consistency, Finish and release it
Figure27:Release Project Invoice Request
Once we release the Project Invoice request , the Customer Invoice Request is automatically created under Invoice Request view of Customer Invoicing workcenter and then Release the Customer Invoice.
Figure28:Release Customer Invoice
Journal entry for customer invoice after revenue recognition ( Service) is posted .
Figure29:Journal entry for customer invoice
Journal entry for customer invoice after revenue recognition (material) is posted.
Figure30:Journal entry for customer invoice
Navigate to Cost and Revenue Workcenter > Sales Document items > Search for Sales Order > Execute the Revenue Recognition after Customer Invoice and click on ok
Figure31:Execute Revenue Recognition
Journal entry for Revenue Recognition after Customer Invoice where “Deferred Revenue” and “Unbilled Receivables” will be cleared when Revenue Recognition is performed subsequently
Figure32:Journal entry for Revenue Recognition
Do comment your feedback and thoughts on this blog post in the comment section.
Some of the Revenue recognition related documents from Help Library are:
Have a look at my previous blog post on ‘Revenue Recognition for Product Sales in SAP Business ByDesign’ mentioned below
https://blogs.sap.com/?p=1609578?source=email-global-notification-bp-new-in-tag-followed