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Fixed price project estimates and revenue recognition

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Hi everyone,

I have a question regarding posting estimates and revenue recognition for FP projects.

When estimates are posted on FP project, the ledger posting is done on two accounts: Accrued revenue – sales value and WIP-sales value.

The posting of the project invoice is done on WIP-invoiced on account.

How do we close the amount on account Accrued revenue – sales value (3999)? The intention is to “transfer” the amount from the accrual account to a revenue account.

Thanks in advance.

KR,

Teodora

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Ludwig Reinhard Microsoft Employee on at

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Hello Teodora,

Once all milestones are invoiced and after you have posted all accrued revenues at the end of the project then you need to run a last estimate for the elimination, which clears the WIP sales value and WIP invoiced on account ledger accounts.

They are basically posted against each other to clear out the balances.

Best regards,

Ludwig

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dkadavarath 25 on at

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I have the same question. We did the elimination and cleared the WIP accounts, but what happens to the Accrued revenue account now? Our main revenue account is still not hit so far.

Thanks in advance

DK

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Gaurangkumar Jani 4,556 User Group Leader on at

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Hi Dileep,

In D365FO, Fixed price project revenue always book into Accrued revenue. As these projects are long-term so periodic revenue requires to book irrespective of invoicing. This should not be reversed otherwise you will end up will all revenue in One period which will be a violation of Accounting Standards.

Alternative: Use Actual Revenue accounts for "Accrued Revenue".

Let us know if this helps.

Thanks,

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dkadavarath 25 on at

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Hi Gaurang,

Thanks for the clarification.

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Gaurangkumar Jani 4,556 User Group Leader on at

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dkadavarath 25 on at

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Hi Gaurang,

I'd like to do that, but I'm not the OP for this post.

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