Project Contract - Before and after confirmation

Scenario 1 - Change of cost and sales price before confirmation of project contract 

Before project contract confirmation, the time transaction has following actuals transactions:

The cost and sales price are updated and the project contract is "Confirmed". This is the message which system gives. Highlighted part is important.

After project contract confirmation, the time transaction has following actuals transactions:

Now if the contract is lost, then the system reverses the "Unbilled sales" as seen below:

Scenario 2 - No change of cost and sales price before confirmation of project contract 

Before project contract confirmation, the time transaction has following actuals transactions:

If there is no change made to the cost and sales prices and if the contract is confirmed after the posting of transaction, this is what happens to the actuals - nothing.

After the contract is lost.

Scenario 3 - Change of cost and sales price after invoicing but before confirmation of project contract 

Before project contract confirmation, the time transaction has following actuals transactions:

The time transactions will now be billed by changing the status to "Ready for invoicing"

Once invoiced, the "Unbilled sales" are reversed and the " Billed sales" is generated.

Now if the cost (is changed from 270 to 290) and sales (is changed from 350 to 380) prices are changed and the contract is confirmed, this is what happens. The transactions that are billed remains unchanged, refer to the transactions in RED. The transactions that are yet to be billed, are updated with new prices as described above, refer to the transactions in BLUE.

But the system is smart enough to understand that the new "Unbilled sales" should appear in the back log transactions area:

Straight Line Rev Rec - Observation with respect to dimensions on individual milestones (On-account)

If there are two on-account (milestones) lines on the Straight Line Rev Rec project, with different dimensions, other than the one on the project, for example as below, then rev-rec line ignores the dimensions on the lines and inherits the dimensions from the project.

If the project has no dimensions, then the rev-rec line also will inherit no dimensions, even if there are dimensions on the on-account lines and even if the dimensions on the on-account lines are same.

So effectively what system is doing is, ignoring the dimensions on the individual on-account lines and ONLY inheriting them from the project.

Dimensions on the project

On-account (milestones) lines on the project

Dimensions on the first milestone line

Dimensions on the second milestone line

Dimensions on the rev-rec line

Invoice, Invoice in Advance and Invoice in Arrears - T&M

 

Scenario 1 - Rev rec at Invoicing

Fee Journal

DR Project WIP Sale Value (B/S) – 1000

                             CR Project Accrued Revenue - Sale value (P&L) – 1000

              Expense Journal – Consumption

              Dr Cost – 500

                             Cr – B/S – 500

Dr Project WIP Sale Value (B/S) – 500

                             CR Project Accrued Revenue - Sale value (P&L) – 500

Invoice

Dr Project Accrued Revenue - Sale value (P&L) - 1000

              Cr Project WIP Sale Value (B/S) – 1000

Dr Project Accrued Revenue - Sale value (P&L) - 500

              Cr Project WIP Sale Value (B/S) – 500

DR Accounts Receivable (B/S) – 1500

              Cr Project Invoiced revenue (P&L) - 1500

 

Scenario 2 - Advance Invoice

Invoice in advance

DR Accounts Receivable (B/S) – 12000 – Accounts receivable

                             CR WIP Invoiced – On account (B/S) – 12000 – Deferred Income

Fee Journal

DR Project WIP- Sale Value (B/S) – 1000

                             CR Project Accrued Revenue - Sale value (P&L) – 1000

              Expense Journal – Consumption

              Dr Cost – 500

                             Cr – B/S – 500

Dr Project WIP - Sale Value (B/S) – 500

                             CR Project Accrued Revenue - Sale value (P&L) – 500

 

Invoice month end – month one – Invoice value - 500

                            Dr Project Accrued Revenue - Sale value (P&L) - 1000

              Cr Project WIP - Sale Value (B/S) – 1000

Dr Project Accrued Revenue - Sale value (P&L) - 500

              Cr Project WIP - Sale Value (B/S) – 500

DR WIP Invoiced – On account (B/S) – 1000

Dr AR - 500

CR Project Invoiced revenue (P&L) - 1500

On-account Advance invoice voucher

Fee posting voucher

Matching the fee with advance (rev rec) – Zero value Invoice

Zero value invoice document

 

Scenario 3 – Invoice in arrears

Fee Journal – to recognise the revenue

DR Project WIP Sale Value (B/S) – 1000

                             CR Project Accrued Revenue - Sale value (P&L) – 1000

Expense Journal – Consumption

              Dr Cost – 500

                             Cr – B/S – 500

Dr Project WIP Sale Value (B/S) – 500

                             CR Project Accrued Revenue - Sale value (P&L) – 500

Invoicing quarterly (Invoice Value – 3,500)

Dr Project Accrued Revenue - Sale value (P&L) – 3,000

              Cr Project WIP Sale Value (B/S) – 3,000

Dr Project Accrued Revenue - Sale value (P&L) - 500

              Cr Project WIP Sale Value (B/S) – 500

DR Accounts Receivable (B/S) – 3,500

              Cr Project Invoiced revenue (P&L) – 3,500