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Dynamics 365 Community / Forums / Microsoft Dynamics AX (Archived) / cost recognition project
Microsoft Dynamics AX (Archived)

cost recognition project

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Posted on by agus 1,174

Hi expert,

I'm using Project type "fixed price", and cost template choose "straight line" to recognize revenue base on actual start date - actual end date.

my question is, how to recognize the cost, similar to concept as revenue recognition ?

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  • agus Profile Picture
    agus 1,174 on at

    hi anybody can help this case ?

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at

    Hi agus,

    Have you tried following the instructions described on the following site?

    daxmyshare.wordpress.com/.../straight-line-revenue-recognition

    What you need is basically a cost template with the 'straight line' completion type and an on-account Position that you invoice. The invoice is posted against the WIP invoiced on-account ledger account on the credit side.

    DR: Accounts Receivable

    CR: WIP invoice on-account

    After posting the invoice you need to run estimates for example on a monthly basis.

    Posting the estimates posts transactions on the WIP sales value ledger account on the debit side

    DR: WIP sales value

    CR: Accrued Revenue

    At the end of the project you need to eliminate the estimates and AX creates the following posting

    DR: WIP invoice on-account

    CR: WIP sales value

    Hope this helps.

    Best regards,

    Ludwig

  • agus Profile Picture
    agus 1,174 on at

    thanks ludwig for reply,

    i have followed that article.

    assume from that article :

    total cost occurred $ 500, & percentage of completed 17.39% but the what i need is, once i run estimate, Total revenue 173.91 is correct, and i need total cost recognition only 17,39% X 500 = $ 86.95

    possible in ax  ?

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at

    Hi agus,

    This is not possible out of the box.

    When you have $500 costs and a POC of 17.39%, then AX will multiply the 17.39% with the contract value to calculate the Revenue.

    Let's say your contract value is $1000, then you will have a revenue of $173.90.

    At the time you post the estimate, $500 will be recognized as costs and $173,90 will be recognized as revenue.

    A possible workaround is making use of the earned value management approach.

    This can, however, only be implemented by making use of a workaround that makes use of a main and a sub-project.

    Here is an example how this works: dynamicsax-fico.com/.../earned-value-analysis

    This earned value management approach is, however, different from what you describe because the total costs will still be $500.

    Best regards,

    Ludwig

  • guk1964 Profile Picture
    guk1964 10,888 on at

    Its potentially tricky because you have incurred the cost, and  the actual end date of the project may change from plan, and its also possible the project will be abandoned without any more revenue.

    So over how many periods should you reflect that cost?

    Maybe all the revenue relevant to that cost was billed in the first period and the cost should recognized immediately.

    So that implies the  need to differentiate whether a cost is to be either recognized for a current period or to be recognised over the project life.  

    For those costs to be spread over the life of the project, maybe an accrual posting with monthly reallocation e.g.  total % of cost to be charged to project = total % of expected sales revenue billed?

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