<?xml version="1.0" encoding="utf-8"?>
<ManualTopic ID="/baanerp/ti/onlinemanual/000370" xml:lang="en">
   <Header>
      <Title>Overview of interim revenue recognition in Project Control
		(PCS)</Title>
      <Keyword type="header" order="d1e2389282">
         <Level1>Revenue recognition</Level1>
         <Level2>Project Control</Level2>
      </Keyword>
      <Keyword type="header" order="d1e2389287">
         <Level1>Project Control</Level1>
         <Level2>revenue recognition</Level2>
      </Keyword>
   </Header>
   <GeneralSection>
      <SectionTitle>Why interim revenue recognition?</SectionTitle>
      <Paragraph>When you manufacture products using projects in <GUIRef href="/baanerp/ti/pcs" role="module" Update="No">Project Control (PCS)</GUIRef>, you often deal with long lead times. During the projects,
		actual costs are recorded. Revenues and Cost of Goods Sold (COGS) can be
		determined at the end of the project when the products are finished and
		delivered. However, international accounting rules, for example, IFRS
		(International Financial Reporting Standards) require more transparancy in
		business financials. Public companies must be able to recognize costs and
		revenues not only at the end of the project but also on different moments
		during the project.</Paragraph>
      <Paragraph>With revenue recognition in PCS you can determine the interim
		revenue and interim Costs of Goods Sold (COGS) for an unfinished project, even
		before shipping any end item.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Terms</SectionTitle>
      <List>
         <ListItemHead>Revenue</ListItemHead>
         <ListItem>The gross inflow of economic benefits such as cash,
		  receivables, and other assets during an accounting period. Revenue results from
		  the usual operating activities of an enterprise, for example, sales of goods,
		  sales of services, interest, royalties and dividends.</ListItem>
         <ListItemHead>Actual costs</ListItemHead>
         <ListItem>The real costs of production, hours accounting, purchase,
		  service, sales, finance, warehousing and/or a PCS project.</ListItem>
         <ListItemHead>Cost of Goods Sold (COGS)</ListItemHead>
         <ListItem>An accounting classification to determine the amount of direct
		  materials, direct labor, and allocated overhead associated with the products
		  sold during a given period of time.</ListItem>
         <ListItemHead>Work-in-Process (WIP)</ListItemHead>
         <ListItem>The value of actual costs and results, subtracted with the
		  COGS posted on the project. The WIP value is used for financial reporting on
		  the balance sheet. When a project is closed, the WIP is cleared.</ListItem>
      </List>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Percentage of completion</SectionTitle>
      <List>
         <ListIntro>If you want to know the interim COGS and interim revenues at a
		  specific moment, you must first determine which percentage of the work on the
		  project is completed. You can use three methods to calculate the percentage of
		  completion (POC):</ListIntro>
         <ListItemHead>
            <GUIRef href="/baanerp/ti/domains/pcs.pocm#cost" role="option">Cost to date</GUIRef>
         </ListItemHead>
         <ListItem>The actual costs spent until a specific date divided by the
		  estimated total costs at completion. For example, the total estimated costs of
		  the project are $1980,-. The actual costs until the moment that you want to
		  recognize revenue are $200,-. The POC is 200/1980 = 10,1%.</ListItem>
         <ListItemHead>
            <GUIRef href="/baanerp/ti/domains/pcs.pocm#hours" role="option">Hours progress</GUIRef>
         </ListItemHead>
         <ListItem>The actual hours spent until a specific date divided by the
		  estimated total hours at completion. For example, the total estimated hours of
		  the project are 500. The actual hours until the moment that you want to
		  recognize revenue are 100. The POC is 100/500 = 20%.</ListItem>
         <ListItemHead>
            <GUIRef href="/baanerp/ti/domains/pcs.pocm#manual" role="option">Manually entered</GUIRef>
         </ListItemHead>
         <ListItem>A percentage that expresses an estimate of the completed work.
		  For example, you estimate that on a specific moment, 25% of the work on your
		  project is finished.</ListItem>
      </List>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>To calculate interim revenue and COGS</SectionTitle>
      <Paragraph>To calculate the interim revenue on a specific moment, the
		following calculation is carried out:</Paragraph>
      <Paragraph>
         <HTML:IMG xmlns:HTML="http://www.w3.org/TR/REC-html40" height="235" width="529"
                   SRC="../images/tr_graph_calculate_interim_revenue_projects.jpg"
                   alt="[...]"/>
      </Paragraph>
      <Paragraph>To calculate the interim COGS on a specific moment, the
		following calculation is carried out:</Paragraph>
      <Paragraph>
         <HTML:IMG xmlns:HTML="http://www.w3.org/TR/REC-html40" height="235" width="529"
                   SRC="../images/tr_graph_calculate_interim_cogs_projects.jpg"
                   alt="[...]"/>
      </Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Procedure for interim revenue recognition</SectionTitle>
      <ProcedureList>
         <ListIntro>To calculate interim COGS and revenue, you must go through a
		  number of sessions:</ListIntro>
         <ListItem>
            <Link href="/baanerp/ti/pcs/tipcs2130m000" role="session">Project Details (tipcs2130m000)</Link>
         </ListItem>
         <ListItem>
            <Link href="/baanerp/ti/pcs/tipcs3290m000" role="session">Calculate Interim COGS and Revenues by Project (tipcs3290m000)</Link>
         </ListItem>
         <ListItem>
            <Link href="/baanerp/ti/pcs/tipcs3191m000" role="session">COGS by Cost Component (tipcs3191m000)</Link>
         </ListItem>
         <ListItem>
            <Link href="/baanerp/ti/pcs/tipcs3190m000" role="session">Interim COGS and Revenues by Project (tipcs3190m000)</Link>
         </ListItem>
         <ListItem>
            <Link href="/baanerp/ti/pcs/tipcs3291m000" role="session">Confirm and Post Interim COGS and Revenues by Project (tipcs3291m000)</Link>
         </ListItem>
      </ProcedureList>
      <Paragraph>The details are described in <Link href="/baanerp/ti/onlinemanual/000371" role="manual">Procedure for interim revenue recognition in Project Control (PCS)</Link>
      </Paragraph>
   </GeneralSection>
   <RelatedTopics>
      <SectionTitle>Related topics</SectionTitle>
      <RelTopic>
         <Link href="/baanerp/ti/onlinemanual/000371" role="manual">Procedure for interim revenue recognition in Project Control (PCS)</Link>
      </RelTopic>
   </RelatedTopics>
</ManualTopic>