Fixed Price Revenue Recognition Calculating 100% complete when there are costs to go

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Posted on by UAli

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Hi,

I have a fixed price project with a total cost budget of 55.1k and actual costs of £40k (incurred via a PO invoice) see below. When i run revenue recognition for the project it keeps calculating that i should recognize 100% of the revenue. However, ideally it should only calculate that about 73% (40k/55.1k) of the revenue should be recognized. When i click into the cost recognition of the created line (see third screenshot below) it shows there are no costs to go. So i can see why its showing 100% of revenue to be recognized but not sure why its not recognizing there are more costs to go of approx. £15k.

Can you help please explain why this would be?

I have actually had this working on previous projects so not sure why this is not working now.

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Dynamics 365 Finance

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Abhilash Warrier 5,402 Super User 2025 Season 2 on at

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Hi,

Please review the below points -

Cost Recognition Settings:

The system might be configured to recognize costs differently for this project. Check the cost recognition settings to ensure they are set up to account for remaining costs.

Project Parameters:

Review the parameters specific to this project. There might be settings that are causing the system to recognize 100% of the revenue prematurely.

Cost to Complete Calculation:

Ensure that the system is correctly calculating the cost to complete. If it shows no costs to go, it might be due to incorrect setup or missing data.

Previous Transactions:

Compare this project with previous projects where revenue recognition worked correctly. Look for any differences in setup, parameters, or transactions.

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Arvind Bharti 686 Super User 2025 Season 2 on at

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Hi,

Can you check your cost templates? how that is setup?

Also if you can change your percentage manually from 100 % and see if its recognizing corrcetling? you can change by clicing on general tab on second screenshot

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UAli 165 on at

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Hi,

Thanks for your comments both.

It turns out the issue was, that the forecast lines had a forecast model assigned to them which was different to what i was selecting when i was running the revenue recognition. Now that i select the same forecast model it calculates the correct costs to go and % complete.

Can you confirm why the forecast model is important within projects? Would you have more than one model being used in a project, if yes what purpose would it have?

Thanks

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André Arnaud de Cal... 300,911 Super User 2025 Season 2 on at

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Hi UAli,

Glad you found a solution for your question. Multiple budget models can be used for e.g. an original and running budget.

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