- Standard doc topics (how to find, how to create, main tab, project structure
- Allocate overhead buttons for Amount (Overheads) distribution.
- Fill current recognition buttons: by Invoiced, by Progress, by Expenses.
- if Project is not marked as Advanced Project Planning, then old Phased revenue recognition mode will be applied (with no project structure and recognition by expenses).
Phased revenue recognition, in line with IFRS 15, is widely applied in contracting for long-term projects such as construction works that extend over several months. Under this method, revenue and costs are recognized progressively, based on the stage of contract completion, rather than solely at the time of invoicing. Any revenue recognized before invoicing is recorded as a contract asset and not as receivables until the related contractual obligations are satisfied and an invoice is issued. This ensures that project revenues are aligned with the actual progress of work performed.
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In addition to the main settings, phased revenue recognition must also be activated within the contract itself. To do this, open the specific contract, go to the Terms tab, and enable the Phased Revenue Recognition option.
Contract→ Project Terms tab→ Use Phased revenue recognition.
Additionally, if the contract involves a foreign currency, you can use the exchange rate defined on the first revenue recognition date to account for exchange rate fluctuations.
If enabled, the exchange rate set on the date of the first revenue recognition will apply to all subsequent phased revenue recognition documents, with gains or losses calculated only when the invoice is issued.
If disabled, gain/loss calculations will occur during month-end closing using the exchange rates applicable on each document's date.
How to create
Project costing→ Project costing documents→ Phased Revenue Recognitions
Alternatively, Accounting → Service tools → Phased revenue recognitions→ Revenue Recognitions→ Create
Main tab
The Main Tab contains key information related to Phased Revenue Recognition.
When creating a Phased Revenue Recognition document, the The following fields are available. All details are filled automatically once a Project is selected:
Company Name- The company from project for whom which the recognition is being created.Entity Name-The entity issuing the recognition.
Contract- Customer Company contract linked to revenue recognition.
Project-Project Project for which phased revenue recognition is applied.
Customer Order- Related sales or customer order, if applicableLink the customer order.
- Entity -The entity recognizing the revenue.
Planned Expenses Source-Basis Basis for expected costs used in calculations.
Basis-Source Source document from which the recognition is created (e.g., project estimate, customer order).
Comment-Field Field for additional notes.
Project Structure
This tab is used to manage Project Structure displays all project tasks, their estimates, expenses, and the method of recognizing revenue for each part of the projectand provides a framework for allocating costs and recognizing revenue.
Refill – Refills - Reloads all data ( tasks, estimates, expenses) automatically pulled when the project was selected.
Allocate Overheads – Allocates expenses that were not yet distributed. Allocation can be done by:
Planned expenses
Actual expenses
Reset allocation to remove previous distribution
Non-allocated expenses appear in yellow.
Fill Current Recognition – Defines how revenue for the current period should be recognized. Options include:
By Invoices – Based on invoice documents created.
By Progress – Based on progress reports prepared.
By Expenses – Based on incurred expenses.
Code – Task or work package and expenses linked to the selected project.
Code- Task reference number.
Project Task – - Description of the task or activity.
Estimate – Planned - Planned values from project estimates:
Price
- Planned unit price.
Amount
- Planned total amount.
Already Recognized – - Values already recognized in past periods:
Qty
- Quantity already recognized.
Amount
- Value recognized.
%
- Percentage of task completed/recognized.
Current Recognition – - Values recognized in the current perioddocument:
Qty
- Quantity to be recognized now.
Amount
- Value recognized
in this
document.
Current %
- Percentage recognized in the current
document.
Cumulative %
- Total percentage recognized up to now.
- Expenses – - Planned, actual, and overhead expenses:
Amount (Planned)
- Estimated (Budgeted) cost of the task. Filled based on the Planned Expenses Source.
Amount (Actual)
- Actual expenses recorded.
Amount (Overheads)
- Overhead allocation
, the Unallocated expenses are highlighted in yellow
.
Invoiced Before – Values - Values already invoiced to the customer.
Progress- Progress – Physical or financial progress of the task.
Business Activity – - Activity type (e.g., Main Activity).
Income Item – - Revenue classification (e.g., Sales Revenue).
GL Accounts – - Accounts used for posting recognized revenue.
Transaction Content – - Used to add any Additional reference for postingrequired.
- To create and use Work type items with associated costs, enable Use Work Type Items in Sales Documents on the Administration > Settings > Sales form. Work-type items can be used in documents such as Quotations, Customer Orders, Adjustments, Credit Notes, Tax Credit Notes, Tax Invoices, and Project Estimates.
To allocate costs to specific cost objects, enable Advanced Product Costing in Administration → Settings → Production. Then define which objects can serve as cost objects: Customer Order, Project, Project Task, or Item.
If a Project is not flagged as Advanced Project Planning, the system will apply the old Phased Revenue Recognition mode, which does not support project structure and recognizes revenue based solely on expenses.
To create a Phased Revenue Recognition document-
go to Project Costing> Phased Revenue Recognition.
Create a new document, and fill in the required tabs as explained.
On the Main tab, you can enter general information such as the customer, contract, project, and other relevant data. Key fields include:
The Revenue and Costs tab allows users to list and manage items for revenue recognition in phased contracts. It includes two panes:
- Services Pane: Lists work and service items for revenue recognition. Users can specify item details, quantities, discounts, and recognition percentages.
- Work Costs Pane: Displays associated costs for listed services, with options to view costs from previous recognition phases.
This tab helps track recognized revenue and costs based on contract progress, ensuring accurate financial reporting.
The Services Pane allows adding and managing Work/Service items with details like quantity, price, discounts, VAT, and optional characteristics. Additionally, some more fields need to be filled i.e.
- Already Recognized: The Already Recognized Quantity and Already Recognized Revenue columns show the revenue and costs recognized in previous phases. You can access more details in the Costs Recognized for Previous Phases tab if necessary.
- Revenue Recognition Percent/ Current-Phase %: Specifies the percentage of total revenue to be recognized in the current phase.
- Cost Details: The Total Cost and Already Recognized Costs columns show the costs associated with the work, including previous recognitions.
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- Percentage-of-Completion: Revenue is recognized gradually as work progresses, often based on costs incurred or work completed.
- Milestone-Based: Revenue is recognized when specific milestones or deliverables are met.
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Allocate Overheads
This function is used to distribute expenses that have not yet been assigned. Allocation methods include:
- By Planned Expenses
- By Actual Expenses
- Reset Allocation
- By Planned Expenses - Distributes overheads in proportion to the planned (estimated) expenses of each task.
For example, if the unallocated overhead is 480 and all tasks have equal planned amounts, the overhead will be divided equally among them since their proportional share is the same.
By Actual Expenses - Overheads are distributed according to the actual costs of each task. Tasks with no expenses recorded do not receive any allocation.
Overhead = (Actual Expense of that Project task÷ Total Actual Expenses of all tasks) × Total Undistributed Overhead
CONSTRUCTION WORK- 10,000 ÷ 10,690 × 480 = 449.02
PIPE SIZE 6"- 690 ÷ 10,690 × 480 = 30.98
- Reset Allocation- Cancels previous allocations and returns expenses to an unallocated state.
Fill Current Recognition
Defines how revenue for the current period should be recognized. Options include:
- By Invoiced- Revenue is recognized based on a percentage of the invoice value, with the pending balance calculated accordingly, so that the revenue percentage for each line aligns with the invoiced percentage.
- By Progress- Revenue is recognized according to the percentage of work completed, as reflected in progress reports. The pending revenue is calculated to ensure that the recognized revenue corresponds to the reported progress for each line.
- By Expenses- Revenue is recognized in proportion to the actual expenses incurred during the period. The pending revenue is determined by comparing incurred costs to the total estimated costs, aligning the recognition with the expense percentage.
Not Advanced Project Planning
If the project is not marked as Advanced Project Planning, the system switches to the standard Phased Revenue Recognition mode. In this mode, the project structure is not available, and revenue can be recognized using one of the following methods:
a) By Invoice- Revenue is recognized according to the invoiced amounts issued for the project.
b) By Progress- Revenue is recognized in line with the progress achieved, as reported for the project.
Additionally, document table can be filled By Already Recognized Revenue and Cost- this button is filling already recognized in previous periods.
Additional Information Tab
This tab contains the following fields:
Department- The department responsible for the recognition process.
Responsible- The employee or person accountable for preparing and managing the recognition.
Use Exchange Rates Defined on the First Revenue Recognition Date- An option to fix and apply the same exchange rates from the first recognition date for consistency across subsequent recognitions.
