Project revenue recognition schedule FAQs

You do not actually create a revenue recognition schedule manually. Intacct generates a revenue recognition schedule for a line item pertaining to a project automatically when you post the sales transaction. The transaction must meet the following criteria:

• Your company must be subscribed to Order Entry, Revenue Management, and Project Accounting.
• The transaction definition Contains the accounting rules, workflow settings, security settings, and other characteristics for a transaction. Transaction definitions are maintained by admins. must have Enable revenue recognition set to Post.
• The sales transaction line item has a revenue recognition template defined on it.
• The sales transaction line item has a Project and Task, if applicable, defined on it.

The following is an example of generating a project revenue recognition schedule from an Order Entry transaction. Your company's workflow may differ.

1. Create a sales order and add an item for which project revenue will be recognized.

   For example, let's say we’re recognizing revenue at the project level for a fixed fee project. We add one item that contains the full contract amount of the project.

2. In the Entries section, select a Rev rec template to use for the project.
3. (Optional, depending on the transaction definition) Enter a Start and End date for the recognition period.

4. Select the Project and Task, as applicable.

5. Post the sales order.

   The transaction list appears.

6. Locate the new sales order in the list and select View to open the sales order.
7. In the Entries section, select the applicable line item and select the Show details tab.
8. Select View schedule.

   The Revenue Recognition Schedule window appears.

Revenue recognition is usually scheduled for projects based on one of the following recognition methods:

• Percent completed: based on the percentage of completion of a project calculated at the project or task level. The project will have one recognition schedule.
• Milestone: based on the percentage of completion of a specific project task (a task that has been identified as a milestone task). A project can have multiple milestone tasks, and each milestone task line item on a sales transaction could have its own revenue recognition schedule.

Revenue recognition can be scheduled to occur as work progresses on a project (at whatever percentage of completion exists for the specified recognition period) or it can be scheduled to only occur when certain completion percentage threshold values are met.

For example, let's say the completion percentage is based on the project and the recognition period is monthly. You have a project that is 15% complete in January.

• If no threshold values have been set, 15% of the project revenue can be recognized in January.
• If there was a 25% threshold value, then no revenue could be recognized for January because the completion percentage did not meet the threshold value.
• If the project was 27% complete in January and there was a 25% threshold value, 25% of the revenue could be recognized in January.

As project revenue recognition is based on completion percentages, Intacct cannot create a complete recognition schedule with defined posting dates and posting amounts as the dates are not known until a completion percentage is known.

If you posted a sales transaction that contains an item associated with project revenue recognition and Intacct cannot find the applicable percentage completion value, the revenue recognition schedule shows one row for the entire item amount and the Posting date field is blank.

Completion percentage values at which revenue can be recognized may be defined in the revenue recognition template A revenue recognition template defines the amortization schedule for the deferred revenue. It contains the contract term, allocation method, and other data required for calculating the schedule. Administrators usually maintain these templates.. When the completion percentage for a project or task reaches one of these thresholds, the applicable portion of project revenue is available to be recognized.

The settings in the revenue recognition template determine the schedule posting dates except when the recognition is based on the Observed percent completed table entries in the project.

When revenue recognition is based on budgeted costs or time

In the revenue recognition template, the Posting day can be set to any day of the month, daily, or end of period.

The following examples assume the template Posting method = automatic (the system scheduler automatically posts revenue recognition for each applicable period):

• if Posting day = 4, then each scheduled revenue recognition journal entry will have a Posting date of mm/04/yyyy when there’s revenue that can be recognized during the applicable Recognition Schedule Period.
• If Posting day = Daily, then the scheduler runs each day and if there’s revenue that can be recognized, it will post as of today's date.
• If Posting day = End of Period, the Posting date is the last day of the applicable Recognition Schedule Period when there’s revenue to be recognized.

The following examples assume Posting method = manual (the user manually chooses to post revenue recognition when desired):

• If Posting day = Daily, the Posting date is today's date.
• If Posting day does not equal Daily, the first period Posting date is either based on the date the first timesheet posted to the project or, if there are no timesheets, based on the applicable Recognition schedule period.

When revenue recognition is based on Observed percent completed

The As of date entered in the Observed percent completed table in the project or on the task will be the scheduled posting date for revenue associated with the corresponding percentage of completion, depending on whether recognition is based on the project or task.

For example, say you are using a revenue recognition template that is based on Observed percent completed on the project as a whole. The template specifies threshold levels of 25%, 50%, 75%, and 100% that must be reached in order to recognize revenue. The project has the following entries in the Observed percent completed table:

When you open Manage Revenue Schedules and sort for items available to post on or before January 31, 2022, no transaction line items appear for this project as 15% recorded on January 25 is below the 25% threshold.

You filter again as of March 31, 2022. An amount equal to 25% of the line's revenue appears with a scheduled posting date of March 04, 2022.

It depends on the settings in the revenue recognition template associated with the selected sales item on the sales transaction. The following table shows how Intacct obtains the completion percentages:

Recognition Method	Calculate on	Based on	Calculation
Percent completed	Project	Estimated hours	Total Approved Duration / Total Estimated Duration (from all project tasks)
Percent completed	Project	Planned hours	Total Approved Duration / Total Planned Duration (from all project tasks)
Percent completed	Project	Budgeted hours	Total Approved Duration (from all project tasks) / Budgeted Duration (from project)
Percent completed	Project	Budgeted cost from GL	Actual Cost / Budgeted cost from GL Actual cost is based on the Cost account group specified in the Configure Projects page, Budgeted cost from GL is pulled from Budget ID selected in the Project Summary tab. This option is not available from the top level of a multi-entity shared company.
Percent completed	Project	Budgeted cost from Summary	Actual Cost / Budgeted Cost Actual cost based on the Cost account group specified in the Configure Projects page, Budgeted Cost based on amount entered in the Project Summary tab. This option is not available from the top level of a multi-entity shared company.
Percent completed	Project	Observed percent complete	User enters desired values in the Observed percent completed table on the Project Additional Info tab. See the example in When revenue is based on Observed percent completed.
Percent completed	Task	Estimated hours	Approved Duration / Estimated Duration from selected task associated with selected sales item
Percent completed	Task	Planned hours	Approved Duration / Planned Duration from selected task associated with selected sales item
Percent completed	Task	Observed percent complete	User enters desired value in the Observed percent completed field for selected task associated with selected sales item.
Milestone	Task	Estimated hours	Approved Duration / Estimated Duration from selected milestone task associated with selected sales item
Milestone	Task	Planned hours	Approved Duration / Planned Duration from selected milestone task associated with selected sales item
Milestone	Task	Observed percent complete	User enters desired values in the Observed percent completed table on the Task Additional Info tab for applicable the milestone task associated with selected sales item.

You can:

• View a revenue recognition template from the template list
• View a revenue recognition template associated with a sales transaction line item

View a revenue recognition template from the template list

1. Go to Order Entry > All > Setup > Revenue recognition > Templates.
2. Locate the desired template in the list and select View.

View the revenue recognition template associated with a sales transaction line item

1. Open the sales transaction (it doesn't matter if you open it in View or Edit mode).
2. In the Entries section, select the applicable line item and select the Show details tab.
3. Select View schedule.

   The Revenue Recognition Schedule window appears.

4. Select the link in the Template field.

   The Revenue Recognition Template window appears.

Learn more:

• Project revenue recognition templates
• Revenue recognition schedules

If project recognition is based on hours, 100% recognition is reached when the total actual hours equals the total source hours. However, there may be scenarios where the total actual hours will never equal the total source hours, but you still want to recognize 100% of the project.

In this scenario, set the Observed percent completed table on the applicable project or task to 100% complete as of the applicable date.

This action triggers the remaining revenue to be available for recognition. If you are using hour-based percent-completed project invoicing, this action also triggers the remaining amount to be available for invoicing.

Keep the following rules in mind when managing project revenue in a multi-entity, multi-currency company.

• Create projects at the top level or the entity level.
• Create revenue recognition templates at the top level or the entity level. However, if the Percent or milestone source = Project accounting, the revenue recognition template will only be available in sales transaction dropdown lists at the entity level.
• Enter timesheets at the top level or the entity level.
• Create any Order Entry transactions at the entity level. For example, create sales orders at the entity level.
• Generate invoices at the entity level.
• Post revenue recognition at the entity level.