Result Analysis on Projects

[former_member574111]

Hi Experts,

We are trying to configure RA for projects.

We are engineering services company and have operations globallly under multiple company codes under one controlling area.

We creat a single project and have multiple WBS representing different company codes.

The parent company offshores work to other company codes.

We want to use Result Analysis for POC based revenue recognition.

We are able to calculate POC at each company code (wbs) level.

What I wanted to know is how can we also automate the intercompany transaction revenue recognition in this process.

For e.g. if company A is offshoring work to Company B then there 2 wbs in the project now the revenue caculated and settled on Company B is cost for company A.

Is there a way by which we can automate the revenu recognised on company B is posted on company A wbs as cost?

[kenmelching]

You cannot use RA calculation settlements on a revenue generating project to transfer between company codes. The RA transfer to FI postings only generate accounting documents, they do not generate controlling documents. It is a purely FI transaction.

Scenario 1 cannot be done with standard RA. You need to use intercompany billing to take the 20 cost on Company B and "bill" it to Company A as 30.

In Scenario 2 you would settle the 20 cost to the Company A WBS and use it as the basis for your RA calculations.

You can't calculate RA in 2 company codes based on the same actual cost.

[kenmelching]

In your scenario the Company B WBS is a cost collector and can settle cross-company code to the Company A WBS. You can set up RA to see the settled costs and include them in the RA calculation. I am assuming all of the actual revenue posts to the Company A WBS.

Depending on your inter-company accounting treatment you can also use Inter-Company Resource Related Billing to set up a customer-vendor relationship in order to show revenue in Company B.

[former_member574111]

Hi Ken,

When I tried to first do a POC on Company A it did not allow me to get costs from Company B WBS as it belongs to another Company code, in this scenario like you said I have to first settle cost from Company B WBS to Company A, however just to clear my understanding by settlement you mean only CO settlement not FI, is that right? Else the Company B cost will get transfereed to Company A. Or should I do a statistical calculation of POC using RA on Company A ? But then how do I do FI posting in Company A with statistical RA?

Also when I calculate POC on Company A WBS and post it to FI how can I use RRICB to post Company B revenue as it is only a revenue recognition (accrual on Company A WBS using RA for POC) and not actual billing where I can use back to back billing concept, would be very helpfull if you can elaborate on this...

[kenmelching]

Settling from Company B WBS to Company A WBS is a cross-company code transfer so it will involve CO and FI. Yes, you are transferring costs from company B to company A. Now company A has all of the costs on its books to calculate recognized revenue.

There are ways to do RA calculations across company codes BUT they cannot be transferred to FI. Keep in mind that Settling RA (transfer to FI) is done to adjust the financial books which must be within a company code.

[former_member574111]

Hi Ken,

Just tried to put down two scenarios that we want to implement with respect to revenue recognition based on POC method using RA.

My primary concern is that I am struggling a bit to understand and provide a solution on how can I post the inter company transaction (and possibly automate) where the revenue of the offshoring entity is calculated and posted to FI using RA based on POC method to the onsite WBS.

And secondly for scenario 2, how can I include the offshore WBS cost for calculating POC with RA for the on site WBS.

It would be really helpful if you can guide me through to put down a solution for this...

Please let me know in case you need any more information.

Thanks and Regards.