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IFRS 15 standard establishes some new rules for annual reporting beginning on January 1 of 2018. It provides the rules on measuring the revenue incurred over time with the progress of long-term contract completing.
According to IFRS 15, when an entity has partially completed or completed only some of obligations, it can recognize some revenue as contract asset; however, it still cannot recognize this partial revenue as receivables. Only once all obligations are satisfied, the entity can Issue issue an Invoice and recognize the contract assets and remaining revenue as receivables.
FirstBit provides the functionality of phased revenue recognition that allows each entity to recognize revenue in process of obligations completing proportionally to costs accumulated up to specific dates.
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Note. The Phased Revenue Recognition document is intended for recording costs of the items of only Work, Service, and Labor types.
To be able to create and use items of Work type which can have associated costs, select the Use Work Type Items in Sales Documents on the Administration > Settings > Sales form.The The items of Work type can be used in the following documents: Quotation, Customer Order, Customer Order Adjustment, Credit Note, Tax Credit Note, Tax Invoice, and Project Estimates.
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If you often work with documents related to phased revenue recognition, you can specify the default positions of Projects, Project Tasks, and Customer Orders in Phased Revenue Recognition documents. For this, open the Quick menu > Personal Settings. At the bottom of the form, click Advanced Settings and open the Document Attribute Positions tab. Then, you can select whether you need Project as a field on the Main tab of the documents or as a column on the Items tab. The similar choice you can make for Project Tasks and Customer Orders. For particular documents, you can change these settings by using the Settings button on the document form toolbar.
Also, you can choose where (in heading or in document lines) you need to place a reference to Customer Order, Project, or Project Task in Phased Revenue Recognition documents.
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The obligations for a such long-term contract can be registered by creating a Customer Order or a Project with Project Estimates or a Customer Order. To designate the stages of the project or contract obligations completing, you can create items of Work type.
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Also, for tracing related costs, you can use the following documents: Debit Note, Inventory Receipt, Other Expenses, bank documents with Other transaction type, and Employee Expense Report. You will need to replace the default account with the Work-in-Progress account and sepcigy specify the cost object.
You can view the current costs of works in progress using the following report: Work in Progress Balances, Statement of Work in Progress.
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