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Control Transfer: Revenue is recognized when control of goods or services passes from the seller to the buyer.
Completion of Performance Obligations: Upon fulfilling its promise(s) in a contract, a business can recognize revenue.
Collectibility: Revenue should only be recognized if payment is reasonably assured.
Point-in-Time vs. Over Time: Recognition can occur at a specific point or over a period, depending on when the performance obligations are satisfied and control is transferred.
Revenue
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Recognition Rules
Revenue Schedules recognition rules play a pivotal role in determining when and how much revenue should be recognized over time. They are typically associated with a sales transaction and driven by an underlying revenue recognition template.
The initiation point of a Revenue Schedule Recognition Rule can vary depending on the type of sales transaction, along with the pre-configured or enabled features and preferences within the system. For instance, the schedule rule can be generated when a transaction is saved, approved, or billed.
Methods for recognizing revenue include:
ScheduleRecognition Rule | Description |
|---|---|
Even Distribution | In this approach, the revenue gets distributed evenly over the charge's lifecycle. |
At Invoice Creation Date | Revenue gets recognized as soon as the invoice is created. |
At Charge Range Start/End | Revenue recognition starts immediately, upon the beginning of the charge range. |
At Charge Range End | Revenue recognition occurs at the end of the charge period |
Recognize at Charge Date | Generally used for one-time charges, where revenue recognition is triggered on the date of the charge. |
Goods Received By Customer/Milestone | Revenue is recognized once the customer receives the goods or a specified milestone is achieved. |
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