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Handling Deferred Revenue

Accounting Support

Your accounting may require to book deferred revenue to a dedicated account. This may be the case if you distribute the revenue of an invoice to one or multiple future booking periods using the Service Period, Booking Month, Service Month or Calendar Year revenue recognition rules. The deferred revenue as well as the complete tax amount are booked in the first involved booking period, based on the booking date set on the invoice. Consequently, the revenue amount booked during the defined period will be "taken out" from the deferred revenue account. As of version 2.52, JustOn supports deferred revenue handling.

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The tax recognition rule Sync With Revenue creates an individual tax booking detail for each revenue booking detail that is created according to the applied revenue recognition rule, which disables the deferred revenue booking.

As of version 2.70, JustOn creates individual deferred revenue bookings that are split along the applied tax rate in the first involved booking period. The subsequent bookings will be, however, combined – no longer separated by tax rate.

For JustOn to generate a booking detail for the deferred revenue, you must create a corresponding Collective Accounts custom setting.

Consider the following example: There is an invoice whose amount is to be distributed equally to four booking periods using the Booking Month recognition rule. Your accounting requires the deferred revenue to be booked to the account 2500. To this end, you create the following collective account setting:

Field Value
Name Deferred Revenue
Type Deferred
Account 2500

Assume the following invoice:

# Quantity Unit Price Service Period Start Service Period End Tax Rate Pos Total (net)
1 1 1000,00 2018-05-01 2018-08-31 19% 1000,00
Subtotal Net 1000,00
Tax 190,00
Grand Total 1190,00

JustOn generates the following booking details on invoice finalization:

# Booking Period Type Amount Notes
1 2018-05 Tax 190 The tax is always booked in the first booking period.
If there is a corresponding collective account setting for taxes, it specifies the account number.
2 Revenue 250 1/4 of the revenue is booked in the first booking period.
The account number is taken from a corresponding G/L accounts setting.
3 Deferred 750 3/4 of the revenue is booked to the deferred revenue account in the first booking period.
The account number is taken from the corresponding collective account setting ( 2500).
4 2018-06 Revenue 250 1/4 of the revenue is booked in the second booking period.
5 Deferred -250 1/4 of the revenue is taken out from the deferred revenue account to offset the booked revenue in the second booking period.
6 2018-07 Revenue 250 1/4 of the revenue is booked in the third booking period.
7 Deferred -250 1/4 of the revenue is taken out from the deferred revenue account to offset the booked revenue in the third booking period.
8 2018-08 Revenue 250 1/4 of the revenue is booked in the fourth booking period.
9 Deferred -250 1/4 of the revenue is taken out from the deferred revenue account to offset the booked revenue in the fourth booking period.

Now assume there are two invoice line items with different tax rates.

# Quantity Unit Price Service Period Start Service Period End Tax Rate Pos Total (net)
1 1 1000,00 2018-05-01 2018-08-31 19% 1000,00
2 1 500,00 2018-05-01 2018-08-31 7% 500,00
Subtotal Net 1500,00
Tax (19%) 190,00
Tax (7%) 35,00
Grand Total 1725,00

Accordingly, JustOn generates the following booking details on invoice finalization:

# Booking Period Type Amount Notes
1 2018-05 Tax 190 Taxes are booked in the first booking period – if set accordingly, to separate accounts.
2 Tax 35
3 Revenue 375 1/4 of the (combined) revenue is booked in the first booking period.
4 Deferred 750 3/4 of the revenue taxed 19% is booked to the deferred revenue account in the first booking period.
5 Deferred 375 3/4 of the revenue taxed 7% is booked to the same deferred revenue account in the first booking period.
6 2018-06 Revenue 375 1/4 of the (combined) revenue is booked in the second booking period.
7 Deferred -375 1/4 of the (combined) revenue is taken out from the deferred revenue account to offset the booked revenue in the second booking period.
8 2018-07 Revenue 375 1/4 of the (combined) revenue is booked in the third booking period.
9 Deferred -375 1/4 of the (combined) revenue is taken out from the deferred revenue account to offset the booked revenue in the third booking period.
10 2018-08 Revenue 375 1/4 of the (combined) revenue is booked in the fourth booking period.
11 Deferred -375 1/4 of the (combined) revenue is taken out from the deferred revenue account to offset the booked revenue in the fourth booking period.

Info

By default, JustOn fills the field Business Partner Account Number in booking details for deferred revenue using the value of the Business Partner Account field of the corresponding Collective Accounts custom setting record. Your business use case, however, may require to use the value of the custom field ON_DebtorNo on the account instead. To support this scenario, you must activate the corresponding global setting.