Maintenance Service Order Processing - Event Based Revenue Recognition

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Revenue recognition means revenue can be accounted in the FIN area independent of the billing activity which normally posts to revenue accounts and generally creates Accounts Receivable liability for the customer. Thus, revenue can be posted before, during or after billing or a value that has already been billed can be distributed between various periods based on the revenue recognition principles.

The core principle of IFRS 15 is that a company will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.

Event-based revenue recognition is incorporated into the Universal Journal in S4HANA. With the original posting on the cost object– e.g., time confirmation, goods issue etc., the calculated revenue results are immediately available in the general ledger that will already include market segment information. This will eliminate the requirement of settlement process as an additional step. This allows real time profitability reporting in P&L and WIP.

A Revenue Recognition key allows us to control how revenue recognition values are calculated and this is related to billing relevance attribute in MSO line item. The billing relevance of MSO item which is Itemized Billing is enabled with a Revenue Recognition key.

What happens when EBRR (Event Based Revenue Recognition) is enabled in FIN integration to Maintenance Service Order processing (MSO)?

Event - 1: Actual cost posting to Cost object (in this case the PM order which supports MSO line in planning and execution of maintenance tasks)

1. Activity allocation (Time confirmation) or parts issue or purchased services for the cost object (PM order) will also result in posting to Revenue Adjustment a/c (P&L a/c) as well as Revenue Accrual a/c (Bal Sheet a/c).

Time Confirmation (Universal Journal ACDOCA entries)

Reference Transaction

AFRU = AFRU Reporting Document

MKPF= Material Document

Business Transaction

RMRU  = Confirm Order

RKL =  Actual activity allocation

TBRR = Event Based Revenue Recognition

COIN = CO Through-postings from FI

 

Parts issue

When the cost posting happens to PMO with same Reference to,  “Reference  Document no “  the Revenue Recognition entries of Revenue Adjustment and Accrued Revenue are posted in one go.

            Event -2 : Billing of Service Job  (say billing of DMR created through RRB of MSO item )

1. Billed revenue (P&L) and Accounts Receivable (Bal Sheet) will be posted on billing of the DMR (& releasing the billing document to accounting).

 

2. Deferred Revenue a/c (Bal Sheet) and Revenue Adjustment a/c account will be posted with the above value.

SD00 = Billing document

VBRK = Billing Document

Event - 3 : Period end activity

1. The accrued and deferred revenue are balanced on period-end

 

App - Product and Service Margin

Business Role: SAP_BR_SALES_ACCOUNTANT

 

App - Display G/L Account Line Items

Business Role: SAP_BR_GL_ACCOUNTANT

 

App – Event-Based Revenue Recognition - Service Documents

 

With EBRR (Event Based Revenue Recognition, there will not be a need for any reconciliation between revenue recognition data and Gen Ledger Account.

The period-end closing process is simplified.

Real time profitability, margin analysis and WIP reporting are facilitated.

Reference : -->  Maintenance Service Processing in S4 HANA | SAP Blogs