Problem: When an Invoice is generated directly from a Phased Revenue Recognition document or from Project Estimates, the Statement of Account may show both the recognized revenue and the invoiced revenue. As a result, the same amount may be reflected twice, creating an apparent duplication.

Solution: Revenue recognized before invoicing is recorded as a Contract Asset, not as Accounts Receivable. The amount should only be transferred from Contract Assets to Accounts Receivable when an Invoice is issued. This approach ensures that revenue is recognized progressively, based on the stage of contract completion, and is not recognized again at the time of invoicing.

When Phased Revenue Recognition is performed, the following entry is created:

Dr Contract Assets – Cr Sales of Services

When an Invoice is created directly from Phased Revenue Recognition or Project Estimates, the following entry is generated:

Dr Current Trade Receivables from Customers – Cr Sales of Services

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 recommended not to create Invoices directly from Phased Revenue Recognition or Project Estimates.

Instead, use the following process:

Step 1. Create a Proforma Invoice based on the Project Progress Report.

Step 2. Create the final Invoice using the Proforma Invoice as the basis document.

When the Invoice is generated from the Proforma Invoice, the system transfers the previously recognized revenue from Contract Assets to Accounts Receivable:

Dr Current Trade Receivables from Customers – Cr Contract Assets

This ensures that the amount is transferred from Contract Assets to Accounts Receivable instead of being recognized as revenue again.

Reporting

The Settlement of Accounts report will display the invoiced amount correctly.

This ensures the proper transfer of amounts from Contract Assets to Accounts Receivable and prevents double recognition of revenue.

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