There are different scenarios for revenue recognition postings No WIP, Completed percentage and completed contract. In this article, we go through the postings of fixed price project which is based on completed percentage.
Project postings method (revenue recognition) are defined on project groups and that project group selected on project creation.
So below are the configurations on project group:
Post costs (hour, Expense, item): profit and loss
On account invoicing: Balance
Revenue recognition: Completion of percentage
Calculation method: None
Cost template: Based on cost
Matching principle: sales value
Company has the project for ERP implementation from a customer. Company has deal for flat amount 200000 and invoice based on milestone completed.
For above scenario you need to first forecast your all cost in project forecast tab and then by day by day enter your actual cost and then RUN estimate process for knowing percentage of completion.
|Project – Cost A/c||16000|
|To Project – Payroll allocation account||16000|
|Project – Cost A/c||6000|
|To Project – Payroll allocation account||6000|
Now create Estimate it will show work completed against forecast
Estimate date: 5/31/2018
Percentage completed: 14.97
Total Cost: 22000 (16000+6000)
Post estimate and posting are as below:
|WIP – Invoiced On Account||29931.97|
|TO Accrued Revenue||29931.97|
- For invoicing go for on- account transaction.
Invoice on account transaction
|To WIP invoiced – on account||20000|