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Revenue Recognition Module - Multiple Sales Order Reallocation

May 14, 2015

Companies that sell multi-element arrangements must follow specific accounting guidelines under US GAAP. Armanino's Dynamics AX Revenue Recognition Management module provides the tools for companies to automate their revenue recognition routines. The real strengths of the module lie on the ability to set up a fair value price to all items, and use this price to reallocate revenue and to defer and amortize revenue, creating revenue recognition schedules for proper recognition.

The Revenue Recognition Management module has been implemented in many companies, and all of them have gained tremendous efficiency in this area.

On May 28, 2014, the FASB and the International Accounting Standards Board (IASB) jointly issued a new revenue standard, IFRS 15 Revenue from Contracts with Customers. In order to be up to date with the new guidelines, the Revenue Recognition Management module has been enhanced to allow the revenue to be reallocated across multiple Sales Orders. This way, the revenue can be recognized in a contract level rather than on an order by order basis.

If you wish to include additional orders to a revenue reallocation, you must select a Sales Order and click Manage action tab > Customer > Reallocate Multiple Orders. The new form will open with a list of all Sales Orders for the specific customer. The selected sales order will be already marked.

Then you must select the additional sales order(s) to be included on the reallocation.

Once all desired lines have been selected, click Update reallocation to recalculate the revenue. This action updates the Reallocated amount fields with the new values, considering all lines included on the bottom grid.

If one or more of the selected sales order lines have been already invoiced, the system will create new GL entries to adjust any previous postings. In this case, you must click Expected voucher to review the adjustment entries that will be generated for any invoiced lines.

Click the OK to finalize the update.

An Infolog will be generated to notify about the creation of the General Journal, to adjust the previously invoiced transactions based on the updated reallocation.

Any existent revenue schedules will also be reversed and recreated, based on the new values.

After the update is performed, the multiple sales order reallocation can be seen on the individual sales orders. And any further postings will be based on the multiple sales order reallocation.

Note: On multiple sales orders reallocation, the sum of the values to be posted as deferred revenue/revenue very likely differs from the invoiced amount of each individual order. In this case, any differences between reallocated amounts (revenue) and invoiced amounts (sales order line amounts) get posted to the account setup under the 'Partial Invoice Revenue Clearing' posting control, which is specific for the Revenue Management module.

Once all the sales orders included on the Multiple SO reallocation have been invoiced, the balance on the 'Partial Invoice Revenue Clearing' posting control should net zero.

Learn more about the Dynamics AX Revenue Recognition module and discover other modules for Dynamics AX to keep your business r

Companies that sell multi-element arrangements must follow specific accounting guidelines under US GAAP. Armanino's Dynamics AX Revenue Recognition Management module provides the tools for companies to automate their revenue recognition routines. The real strengths of the module lie on the ability to set up a fair value price to all items, and use this price to reallocate revenue and to defer and amortize revenue, creating revenue recognition schedules for proper recognition.

The Revenue Recognition Management module has been implemented in many companies, and all of them have gained tremendous efficiency in this area.

On May 28, 2014, the FASB and the International Accounting Standards Board (IASB) jointly issued a new revenue standard, IFRS 15 Revenue from Contracts with Customers. In order to be up to date with the new guidelines, the Revenue Recognition Management module has been enhanced to allow the revenue to be reallocated across multiple Sales Orders. This way, the revenue can be recognized in a contract level rather than on an order by order basis.

If you wish to include additional orders to a revenue reallocation, you must select a Sales Order and click Manage action tab > Customer > Reallocate Multiple Orders. The new form will open with a list of all Sales Orders for the specific customer. The selected sales order will be already marked.

Sales Order 1 Cave Wholesales

Then you must select the additional sales order(s) to be included on the reallocation.

Reallocate Multiple Orders

Once all desired lines have been selected, click Update reallocation to recalculate the revenue. This action updates the Reallocated amount fields with the new values, considering all lines included on the bottom grid.

Reallocate Multiple Orders 2

If one or more of the selected sales order lines have been already invoiced, the system will create new GL entries to adjust any previous postings. In this case, you must click Expected voucher to review the adjustment entries that will be generated for any invoiced lines.

Reallocate Multiple Orders 3

Click the OK to finalize the update.

Reallocate Multiple Orders 4

An Infolog will be generated to notify about the creation of the General Journal, to adjust the previously invoiced transactions based on the updated reallocation.

Infolog

Any existent revenue schedules will also be reversed and recreated, based on the new values.

After the update is performed, the multiple sales order reallocation can be seen on the individual sales orders. And any further postings will be based on the multiple sales order reallocation.

Sales Order 2
Multiple Sales Order Reallocation

Note: On multiple sales orders reallocation, the sum of the values to be posted as deferred revenue/revenue very likely differs from the invoiced amount of each individual order. In this case, any differences between reallocated amounts (revenue) and invoiced amounts (sales order line amounts) get posted to the account setup under the 'Partial Invoice Revenue Clearing' posting control, which is specific for the Revenue Management module.

Once all the sales orders included on the Multiple SO reallocation have been invoiced, the balance on the 'Partial Invoice Revenue Clearing' posting control should net zero.

Learn more about the Dynamics AX Revenue Recognition module and discover other modules for Dynamics AX to keep your business running smoothly.

unning smoothly.

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