1. 1 #AXUGFocus PROJECT ACCOUNTING - UNDERSTANDING REVENUE RECOGNITION Paul Alderdice Solution Architect eBECS North America June 8, 2016

2. 2 #AXUGFocus eBECS North America 659 Auburn Ave Suite 157 Atlanta, GA 30312 Phone: (678) 701-5856

3. 3 #AXUGFocus AGENDA Time & Materials Fixed Price Contract Billing Rules

4. 4 #AXUGFocus T&M - SETUP Project Groups WIP with Accrual WIP without Accrual No WIP Line Properties Billable Non-billable Billable – Not Accrued

5. 5 #AXUGFocus T&M – WIP WITH ACCRUAL Usual WIP setup Revenue & expense recognized at posting

6. 6 #AXUGFocus T&M – WIP WITHOUT ACCRUAL Flexible setup Expenses posted to WIP Manual accrual for P&L

7. 7 #AXUGFocus T&M – NO WIP Conservative setup Expenses hit P&L immediately Manual accrual for revenue

8. 8 #AXUGFocus T&M - LINE PROPERTIES  Billable: Accrue revenue.  Non-billable: Post costs; no revenue accrual.  Billable – Not Accrued: Flag as potential billable.  Chargeable – Can bill.

9. 9 #AXUGFocus FIXED PRICE - SETUP Project Groups Percentage Complete Completed Contract No WIP

10. 10 #AXUGFocus FIXED PRICE – ESTIMATE PROJECT Cost Template  Period Code –Sets up the periods for the calculation

11. 11 #AXUGFocus FP – REVENUE RECOGNITION ACCOUNTING RULE None ???? / Error message Completed Percentage Revenue recognized periodically Based on Calculation Method Completed Contract Revenue recognized at completion of project No WIP Straight to P&L Estimate function greyed out

12. 12 #AXUGFocus FP – CALCULATION METHOD (SALES VALUE MATCHING PRINCIPLE) https://blogs.msdn.microsoft.com/bwelcker/2014/05/19 /estimate-calculation-methods-for-fixed-price-projects/ None AX calculates the percentage of completion for the project and multiplies the result by the contract value to arrive at the amount of revenue to be recognized. This is recognized as a single fee transaction using the project category configured for fee estimate transactions. Markup percent - total AX calculates recognized revenue on the percentage of completion basis in the same manner as the None method. However, instead of posting it as a single line fee transaction with the estimate project category, it allocates the recognized revenue to the individual cost line items on the basis of the proportion of their actual cost to the total actual cost. Markup percent – estimate line AX calculates recognized revenue on the percentage of completion basis in the same manner as the other two methods, but also calculates a percentage of completion per cost template line and then allocates revenue based on manually entered contract values for the cost lines.

13. 13 #AXUGFocus FP – MATCHING PRINCIPLE None & No Matching Only with accounting rule = None Sales Value Costs and revenue are matched at the end of the project with a sales value. Production + Profit Costs and revenue are matched with a sales value that is split into realized costs and a calculated profit.

14. 14 #AXUGFocus CREATE ESTIMATE Cost to complete Total costs are booked Total budget plus actual Cost template

15. 15 #AXUGFocus CALCULATION

16. 16 #AXUGFocus CONTRACT BILLING RULES New to AX 2012 Adds flexibility to invoicing - customizations

17. 17 #AXUGFocus CPE Credit Code: 53C2 Complete Surveys FINAL REMINDERS

18. 18 #AXUGFocus Paul Alderdice Solution Architect eBECS North America palderdice@ebecs.com SPEAKER CONTACT INFO

19. 19 #AXUGFocus