on 02-19-2018 3:45 PM
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?
Please advise.
Regards,
Vivek
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
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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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