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ReportDear Experts,
Please share your recommended solutions for the following scenarios concerning fixed-price project.
Project Parameters
Project Type: Fixed Price
Posting: All costs post to WIP
Revenue Recognition: Percentage of Completion
Calculation Method: None
Matching Principle: Sales Value
Project Duration: 3 years (Starting January 1, 2026)
Project Contract Value: 500,000
Estimated Cost: 300,000
Billing Rule: Milestone
Revenue Recognition Frequency: Monthly (Manual)
Scenario 1: Cost Accruals
During the initial phase, the project incurred costs amounting to 120,000 for high-value equipment and services, exceeding the budgeted allocation for the period. Due to pending vendor invoices and administrative delays, these actual costs were not posted directly to the project.
During the revenue recognition closing process as of January 31, 2026, it was identified that the recorded costs did not reflect actual project consumption. To ensure accurate revenue matching, an accrual must be posted.
Question: Is there standard functionality to manage this scenario, or must we manually post an accrual and subsequently reverse it once the actual vendor invoice is posted?
Scenario 2: Partial Cost Recognition from WIP to P&L
The project consumes 80% of the estimated cost in the first period; however, the business requires only a portion (20% of the cost) to be recognized in the P&L from WIP during that period's revenue recognition.
Question: Is it possible to manually specify the desired cost amount during revenue recognition? (The system automatically captures the total cost posted for the period during revenue recognition).
Scenario 3: Straight-Line Cost Recognition
Question: Is it possible to recognize costs evenly across the project duration, similar to how the system recognizes revenue using a cost template for the straight-line method?
A detailed document is attached for your reference. Your insights and recommendations will be greatly appreciated.
Thank you,
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