Solution
Fusion Cost Management (Costing) needs to maintain the
consistency between COGS and revenue recognition. As revenue is recognized by
Accounts Receivable (A/R) events, Costing must recognize COGS appropriately.
Fusion Cost Management receives these transactions via an interface job against
Fusion Receivables and Fusion Distributed Order Orchestration (DOO). Details
about this job can be found in 1339944.1 - How to Import Revenue Lines into Fusion
Cost Management.
Revenue recognition is imported at the Sales Order distribution line level, and
COGS matches with A/R based on the accounting date of the A/R Invoice. However,
A/R and Costing entries do not need to match periods. If a COGS event occurs in
a closed (Permanently Closed) Costing period, Costing will create accounting
entries in the earliest available open (Open, Pending Closed) period.
When Revenue is partially recognized due to partial acceptance, COGS should be
apportioned. If A/R recognizes X% revenue, then Costing should book X% COGS. In
case revenue is reversed/undone, then COGS should also be reversed as
applicable. Revenue reversals (Credit memos, Return Material Authorizations, et
al.) will not be considered for COGS Recognition. Fusion Cost Management
recognizes COGS through the Cost of Goods Sold processor.
Table: Accounting Distributions
|
Event |
Debit
Account |
Credit
Account |
|
Sales
order issues item |
Deferred
Cost of Goods Sold |
Inventory |
|
Customer
is billed |
Receivables |
Deferred
Revenue |
|
Revenue
is recognized (A/R) |
Deferred
Revenue |
Revenue |
|
Costing
recognizes COGS |
Cost of
Goods Sold |
Deferred
Costs of Goods Sold |
|
Reversal
Events |
||
|
Revenue
recognition reversed |
Revenue |
Deferred
Revenue |
|
COGS
recognition reversed |
Deferred
Costs of Goods Sold |
Cost of
Goods Sold |
