Handling Deferred Revenue
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.
Info
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.