Problem: When an Invoice is generated directly from a Phased Revenue Recognition document or from Project Estimates, the
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system may recognize revenue twice because both documents post revenue to Sales of Services.
Solution: Revenue recognized before invoicing is recorded as a Contract Asset.
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When the Invoice is issued, the recognized amount should be transferred from Contract Assets to Accounts Receivable
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, rather than being recognized as revenue again. This
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ensures that revenue is recognized progressively
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based on the stage of contract completion
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and is
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recognized only once.
Duplication of Revenue Recognition
When Phased Revenue Recognition is performed, the following entry is created:
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As a result, revenue may be recognized twice: first through Phased Revenue Recognition and then again through the Invoice.
Recommended Process to Avoid Duplication
If the contract allows partial revenue recognition, it is recommendednot to create Invoices directly from Phased Revenue Recognition or Project Estimates.
Instead, use the following process:
Step 1. Create a Phased Revenue Recognition with the following entry:
Dr Contract Assets – Cr Sales of Services
Step 2. Create a Proforma Invoice based on the Project Progress Report.
Step 23. Create the final Invoice using the Proforma Invoice as the basis document.
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This ensures that the amount is transferred from Contract Assets to Accounts Receivable instead of being recognized as revenue againwithout recognizing revenue a second time.
Reporting
The Settlement Statement of Accounts report will display the invoiced amount receivable correctly, while the revenue recognized through Phased Revenue Recognition will not be recognized a second time through the Invoiceonly once.
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