### Revenue Recognition for Loss Project

Hi,

We are using Cost method based on POC of revenue recognition of project. I want to know what is the process of handling the revenue recognition for loss projects?

Regards,

Vivek

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• Feb 19, 2018 at 06:56 PM

In RA you can set up Reserves for Imminent Loss (Rp<Cp). Make sure you limit recognized revenue to no more then 100% of Rp.

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• Feb 20, 2018 at 02:44 AM

Hello Ken,

Thank you!!!

I am learning this process in project system, I have below scenario:

Estimated Rev = \$ 61,250

Estimated Cost = \$ 49,000

Profit = \$ 12,250

The first month below are the actuals

Billing = \$ 10,000

Cost = \$ 7,500

Based on above figures system calculates the POC as 15.30% and adjust the revenue by \$ 625 during settlement, this part if perfectly working fine

Second Month

Business realized the project is in loss, so they revised the cost estimate by loss amount i.e \$ 20,000

Estimated Rev =\$ 61,250

New Estimated Cost =\$ 81,250

Profit = \$ (20,000)

There are no actuals posted in the second month, so when I run KKA2 system is calculating revenue recognization as below, the expectation is system should post a loss of \$ (21,875) in the second month. How can this be achieved?

Regards,

Vivek