10/27/2016

DeferredCOGS:HowtousethisfeatureofOracleAppsR12|appsfromrajiv

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DeferredCOGS:HowtousethisfeatureofOracleAppsR12
PostedonJune22,2011

13Votes

Finallyareliefforalltheaccountinguserswhohadproblemsworkingwithoracleappsduetoperiodmismatchof
revenueandcostrecognition.Generallytheorderswhichareshippedonthelastdayofmonthhavethisissue.As
mostofyouknowthattillrelease11i,thevalueofgoodshippedisexpensedtoCOGSwhenthematerialinship
confirmedinshippingandrevenuewillgetrecognizedaftertheinvoicesaregeneratedinARandrevenue
recognitionisdone.TheproblemthataccountantsfacewiththisdesignisthatonthelastdayofmonthCOGSgets
recognizedwhenweshipconfirmthematerialbutinvoicegetsgeneratedinnextmonthandsorevenuegets
recognizedindifferentmonth.Thisdoesnotlookgoodfromthematchingprinciplewhichrequirestherevenue
andcostshouldgetrecognizedinthesameperiod.
ThedeferredCOGSaccountisthenewfeatureintroducedinRelease12.Thekeyfundamentalbehindthefeature
isthattheCOGSisnowdirectlymatchedtotheRevenue.Insimpleterms,thismeans,COGSforanorderlinewill
berecognizedonlyiftherevenueisrecognizedforthatlinemakingsurethattherevenueandCOGSarepostedin
thesamemonth.Matchingpercentageisalsotakencarewhichensuresthatrevenueandcostarealwaysinsync.
Setup:OnlyonekeysetupinvolvedforthisfunctionalityistodefinetheDeferCOGSaccount.
Navigation:InventorySetupOrganizationParametersOtherAccounts
BusinessProcess:
InR11iWhenaSalesorderisshippedandinterfacetripstopiscompleted.ThismakeacalltoCOGSworkflowto
generatetheCOGSaccount.Thisthengeneratefollowingaccounting.
CrInventoryValuationaccount$250
DrCOGSAccount$250
InR12whenasalesorderisshippedandinterfacetripstopiscompletedthefollowingaccountingentriesgets
generated.
CrInventoryValuationaccount$250
DrDeferredCOGSAccount$250
AftertheARinvoiceisgeneratedandtherevenueisrecognised(Consideringyoudonthaverevenuerecognition
policiesorspecificaccountingrules),followingprogramwillcreateCOGSrecognitiontransaction.Thiswillreflect
achangeintherevenuerecognitionpercentageforasalesorderline.
1.CollectRevenueRecognitionInformationprogram:Thisprogramwillcollectthechangeinrevenue
recognitionpercentagebasedonAReventswithintheuserspecifieddaterange.Itcollectsinvoiceinformationof
thesaleorderlinefromRA_CUST_TRX_LINES_ALLandRA_CUST_TRX_LINE_GL_DIST_ALLafterthe
revenueisrecognizedandcheckthepercentagerevenuerecognized.Ittheninsertinformationin
CST_REVENUE_RECOGNITION_LINE.

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DeferredCOGS:HowtousethisfeatureofOracleAppsR12|appsfromrajiv

Navigation:Cost>COGSRecognition>CollectRevenueRecognitionInformation
2.GenerateCOGSRecognitionEvents:ThisprogramwillcreatetheCOGSrecognitiontransactionforeach
salesorderlinewherethereisamismatchbetweenthelatestrevenuerecognitionpercentageandthecurrent
COGSrecognitionpercentage.Thisistheprogramwhichalsomakesthetransactionscostedbycreatingthese
accountingentries.SocostmanagerisnotusedtomakethesetransactionsascostedinR12.TheCOGSaccountin
thisentryistakenfromthedistribution_accountinmtl_material_transactionstable(whichwasgeneratedearlier
byCOGSworkflow).
CrDeferredaccount$250(ActualRevenue%)
DrCOGSAccount$250(ActualRevenue%)
Navigation:Cost>COGSRecognition>GenerateCOGSRecognitionEvents
ThisparticularCOGSrecognitiontransactionactuallycorrespondtoarevenuerecognitionpercentagechange.
Aswehaveseenabovethisnewfeaturedoeshelpinresolvingsomeofthekeyaccountingissuesbutweneedtobe
awareofthefollowingalso
1.WiththisfeaturetheCOGSrecognitionnowrequiresfewextraconcurrentrequeststobesubmitted.
2.ARrevenueneedtoberecognizedtohaveCOGSrecognized
3.ThisfunctionalityisnotoptionalasitismandatorytobeusedinR12
4.TomakethecompletesetoftransactionsvisibleintheMaterialTransactionscreen,IncludeLogical
Transactioncheckboxneedtobechecked.
ThisconcludesourdiscussionaboutDeferredCOGS.NowIamplanningtopicksometopicfromprocurementas
wehavenottouchedthatareatilldate.
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AboutAPPSFROMRAJIV
OracleApplicationConsultantandProjectmanager.Theviewsexpressedonthisblogaremyownanddonotreflecttheposition
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15ResponsestoDeferredCOGS:HowtousethisfeatureofOracleAppsR12
Sudhakarsays:
February23,2012at9:13am

Itisverygoodarticle..explainedveryverynicemanner,,ThankstoRajiv
Reply

Narendrasays:
May28,2012at11:15am

Hirajivitsveryusefultome..
Reply

jharnasays:
July13,2012at9:00am

HiRajiv,
Itistrulyaveryhelpfularticle..
Thanks
Reply

Charansays:
October2,2012at4:42pm

Veryusefularticle.Appreciateyourefforts!
Reply

Sivasays:
January16,2013at5:08am

VeryGood..CrispandClearforastarterlikeme.
Reply

xxxxxxxsays:
January31,2013at12:51am

Veryclearlydocumented
Reply

Lakshmisays:
June12,2013at2:40pm

Abletounderstanditfastwithyourexplanation
https://appsfromrajiv.wordpress.com/2011/06/22/deferredcogshowtousethisfeatureoforacleappsr12/

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DeferredCOGS:HowtousethisfeatureofOracleAppsR12|appsfromrajiv
Reply

Saikatsays:
September10,2013at12:30pm

Excellentaricle,veryuseful.Thanksforyourefforts.
Reply

Govindsays:
November11,2014at2:00am

NiceArticle
Reply

sihungismesays:
April16,2015at4:02am

thanksRajiv,reallyhelpme
Reply

Pradeepsays:
June3,2015at7:13pm

VeryNiceeasyandsimplewaytopresent!!
Reply

Dhirensays:
February10,2016at7:22am

Goodinformation.Veryhelpful.Onequestiononthesame.HowcanthisbehandledinProjectsmodulefortimecards,
expensesandsupplierinvoicesinterfacedfromothersources.?
Reply

APPSFROMRAJIVsays:
May18,2016at6:31am

HiDhiren,Awayfromproductfromalongtime..Notabletohelpmuch..
Reply

manishsays:
May13,2016at2:38pm

Nicearticle.
Reply

APPSFROMRAJIVsays:
May18,2016at6:29am

ThanksManish!!
Reply

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