| # Contract Interim Results (tpctm0180m000) Use this session to define the revenue recognition settings at a contract and/ or the contract line (CLIN) level. The settings defined are applicable for all the contract lines linked to the contract in case of no exceptions. Note The fields in the Revenue Recognition and the Cost of Goods Sold group boxes are enabled only if the Revenue Recognition by field is set to Contract or Contract Line. Infor LN allows you to override the revenue recognition settings on the contract level when you define the revenue recognition settings at the contract line level. Contract The code of the contract for which the revenue recognition settings must be defined. Contract Line The contract line number. Scenario The setting for the scenario, based on which the contract interim result is generated. You can use this to generate alternate data of the interim results. You can also compare the result of this scenario with the primary result for financial reporting purposes such as SAB 74 (accounting standard). Allowed values Interim Results Scenario Description The description of the primary or alternate results. Revenue Recognition by The level at which revenue must be recognized. Allowed values Revenue Recognition by Revenue Recognition Revenue Recognition Method The method used for revenue recognition. Allowed values Revenue Recognition Method Calculation Method The method to calculate the percentage of the work completed. Allowed values Calculation Method for Percentage of Completion Note Default value is Cost to Cost. This field is enabled only if the Revenue Recognition Method field is set to Percentage of Completion. To calculate the revenue to be recognized based on the Percentage of Completion method: In the Project Progress Parameters (tpppc0100s000) session, the value specified in the Leading Forecast Method field is used to calculate the Percentage of Completion. You must run the Build Actual Cost Control (tpppc4803m000) session to retrieve the latest aggregated cost for the project, based on which the percentage of completion is calculated. Percentage Completed The percentage of completion of the project. Based on this method, the expected expenses and revenues are distributed across specific periods, of the contract, when revenues are received. Note You can specify this value manually or click Calculate Percentage of Completion to retrieve the calculated value. Infor LN calculates this percentage using the following formula:
    Percentage of Completion = Costs (incurred) / Estimate at Completion cost
Infor LN calculates the revenue to be recognized using the following formula:
    Revenue recognized = Percentage Complete * Contract Amount
Earned Revenue Factor Specify the earned revenue factor. To calculate the revenue to be recognized, you must multiply this value with the costs incurred for the current period. Note This field is enabled only if the Revenue Recognition Method field is set to Earned Revenue Factor. You can specify this value manually or click Calculate Earned Revenue Factor to retrieve the calculated value. Infor LN calculates the earned revenue factor (ERF) using the following formula:
    Earned Revenue Factor = Project Contract Amount/ Total Budgeted Costs
Infor LN calculates the revenue to be recognized using the following formula:
    Revenue Recognized = Costs (incurred) * Earned Revenue Factor
Note You can calculate the earned revenue factor (ERF) only for projects with the status Active or Finished. Revenue Recognition Threshold The minimum percentage of completion that must be defined before the revenue is recognized. Note The revenue can be recognized when the interim results are generated using the Generate Interim Results (tpppc3250m000) session, only if the percentage of completion is greater than this value. However, if the Profit Percentage is negative, the revenue is recognized even if the minimum percentage of completion is not met. Default value is 0. Revenue Recognition Limit Specify the maximum limit (percentage) on the revenue to be recognized. Note This value is applicable for all the revenue recognition methods other than Completed Project. The maximum revenue to be recognized is calculated using the following formula:
    Maximum Revenue to be Recognized = Revenue Recognition Limit (percentage) * Contract Amount
Default value is 100. Currency The code of the currency in which the revenue to be recognized is expressed. Cost of Goods Sold Method The method to calculate the cost of goods sold (COGS). Allowed values Costs of Goods Sold Method Note This field is enabled only if the Revenue Recognition Method field is set to Percentage of Completion or Actual Revenues. When COGS is set to Percentage of Completion:
    COGS = Percentage Completed * Estimate at Completion; Revenue = Percentage Complete * Contract Amount
When calculating the COGS, Infor LN also considers the loss component. In which case:
    COGS = Revenue + Loss; and Loss = Contract Amount - EAC (estimate-at-completion)
Percentage Completed The percentage of completion of the project. You must multiply this percentage with the estimate at completion (EAC) to calculate the cost to be recognized. Note Infor LN defaults this value with the percentage completed calculated for the project when the Method field is set to Percentage of Completion. You cannot use this value to calculate the cost to be recognized if the Method field is set to Profit Percentage. Profit Percentage Specify the profit percentage. The COGS is calculated based on this percentage and revenue recognized. Note This field is enabled only if the Method field is set to Profit Percentage. You can specify this value manually or click Calculate Profit Percentage to retrieve the calculated value. Infor LN calculates this percentage using the following formulae:
    Profit Percentage = 100 x (1- Budget/Contract amount)
or
    Profit Percentage = 100 x {1- (Estimate at Completion/Contract Amount)}
The COGS is calculated using the following formula:
    COGS = Total Revenue Recognized to date x (1 - Profit Percentage)
When COGS is determined at the project level, Infor LN allows you to select either Budget or Estimate at Completion as the base to calculate the profit percentage. Calculate Percentage Complete Calculates the percentage of the work completed. This button is enabled only if the Revenue Recognition Method field is set to Percentage of Completion. Calculate Earned Revenue Factor Calculates the earned revenue factor using the following formula:
    ERF = project contract amount / total budgeted costs
This button is enabled only if the Revenue Recognition Method field is set to Earned Revenue Factor. To calculate ERF, the project status must be set to Active, because the total budgeted cost can be calculated only for active projects. Calculate Profit Percentage Calculates the profit percentage using the following formula.
    Profit Percentage = Budget / Contract Amount
This button is enabled only if the Method field is set to Profit Percentage. Change Interim Results Method LN allows the user to modify the interim result calculation method such as Cost to Cost, Revenue Recognition Method, and COGS Method. Switch Primary and Alternate Results Settings Selects an alternate setting based on which the interim result must be calculated. For example, if the Primary scenario is specified, you can select the option to use another setting for the scenario, based on which the interim results are calculated. Consequently, the alternate interim result setting is considered as the primary interim result setting. |