SECTIONS
You can recognize cost in the same ways that you recognize revenue:
- Directly against source records. This is the original recognition method supported by Revenue Management. It enables you to comply with legislation such as ASC 605.
- Against revenue contracts which are linked, via performance obligations, to source records. This is known as using multiple-element arrangements. It enables you to comply with legislation such as ASC 606 and IFRS 15.
- Against recognition schedules if your org is configured to generate recognition schedules for source records or revenue contracts.
Setup to Recognize Cost directly against Source Records
The setup required for cost recognition is as described in Setting up Revenue Management, but with the following adjustments:
- Recognition settings records must include Cost as a selected value type, and all mandatory fields must be completed. Mandatory fields typically include Balance Sheet GLA (Cost) and Income Statement GLA (Cost), and any fields that Revenue Management requires to perform its calculations such as Total Cost.
- Recognition templates must specify a Cost Basis and must be linked to a recognition settings record where Cost is a selected value type. A template's configuration will affect which fields are mandatory on the associated settings record.
Setup to Recognize Cost against Revenue Contracts
After completing the setup to recognize cost directly against source records (above), follow the instructions in Additional Setup for using Multiple-Element Arrangements.
Provided that your recognition settings and recognition templates are configured for cost, cost values from source records will be held on performance obligation line items, then rolled up onto performance obligations and revenue contracts.
Setup to Recognize Cost against Recognition Schedules
The setup to recognize cost against recognition schedules is the same as the setup to recognize revenue against recognition schedules, but your recognition settings and recognition templates must be configured for cost as explained in the sections above.
For more information, see About Recognizing Revenue and Cost against Recognition Schedules.