Project Account Revenue Recognition

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Posted on by erpgeek01

Hello Experts,

Kindly advise if the below scenario can be achieved in D365FO.

My client is looking for a way to move the cost from WIP A/c according to the % of revenue recognized during estimate process. Currently D365 moves all the costs that are booked in a project as on the estimate date.

Example:

Project contract amount is 187,500

Total cost and Booked cost is 100,000

POC 50% hence Accrued revenue is 93,750 but the system reversing entire cost of 100000 which leads to negative GP of 6.67%

Expected result is : Cost should be 50000 over revenue of 93750

Thanks in advance

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WillWU 22,363 on at

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Hi erpgeek01,

I think it needs some customization.

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Gaurangkumar Jani 4,558 User Group Leader on at

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Hi There,

Can you explain what is the reason behind this?

If you want to move cost based on % completion, How are you planning to calculate % Completion?

The last I checked % completion is calculated based on actual cost (or Qty / WBS) to Planned / Forecasted Cost (Qty / WBS).

Please can you provide some explanation on this requirement?

Thanks,

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Ludwig Reinhard Microsoft Employee on at

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Hi erpgeek01,

What you describe is not how D365FO does the estimate posting out of the box.

You have a couple of workarounds.

One would be to 'twist' the way how costs and revenues are posted. Basically, you change the setup of the WIP and accrued revenue accounts in the project posting profiles. This might give you the expected outcome. The problem is that most people won't be able to understand this 'accounting trick' and as a result, you will have a very hard time explaining and justifying the data.

The aforementioned system modification is another option but it would result in a change in the posting logic and I would recommend not doing that because it is too risky.

What I would recommend is explaining the customer how D365FO is accounting and recording for the WIP and revenue to get more familiar with this way of accounting.

One major thing is, however, missing, which goes into the direction that you mentioned. That is, there is not out of the box earned value report, which would allow you tracking the progress of the project and that's one of the reason why your customer asks for a different way of posting. Here I would recommend building a PowerBi report that extracts the data from D365FO and illustrates the total/schedule and cost variances for your project.

Best regards,

Ludwig

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