2. OpenWorld 2018 Evolving with ASC 606 / IFRS 15 Revenue Recognition Standard
Seamus Moran, Tapomoy Dey,
& Lakshmana Ravula Oracle Development October 22, 2018

4. Safe Harbor Statement
The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, timing, and pricing of any features or functionality described for Oracle’s products may change and remains at the sole discretion of Oracle Corporation.

5. Oracle’s Investments for EBS Customers Leverage EBS Strengths Combined with Broader Oracle Cloud Portfolio
SCM
Cloud
ERP Cloud
CX Cloud
HCM Cloud
Investments for EBS Customers
EXTEND EBS WITH ORACLE SaaS APPS – HYBRID COEXISTENCE
Supply Chain Planning Cloud
In-Memory Cost Mgt
AI for Manufacturing
Transportation Mgt
Planning & Budgeting
Revenue Mgt
Project Portfolio Mgt
Sales
CPQ
Service
HCM-EBS ERP
Core HCM-EBS Payroll
Recruiting-EBS HCM
UPTAKE EBS ENHANCEMENTS
Functional Innovation
Modern User
Experience
and Mobility
Operational
Efficiency
REPLATFORM EBS ON ORACLE CLOUD INFRASTRUCTURE
Compute
Networking
Storage
Load Balancing
Database Cloud Service
Exadata Cloud Service

6. Program Agenda 1
Evolving Practice Integrating With EBS Integrating with Project Accounting 2 3

7. Program Agenda 1
Evolving Practice Integrating With EBS Integrating with Project Accounting 2 3

8. At the end of the day, your sales are the same
I’m just trying to figure my deferred revenue at fair value
Now I need a revenue engine to book my invoices
The SSP observation tool should work on components
We keep our revenue nice and smooth for the shareholders

9. At the end of the day, your sales are the same but just everything about the process is different
I’m just trying to figure my deferred revenue at fair value
You are trying you figure your debt to customers for goods & services, offset by your future right to bill them, and you value that debt at expected consideration allocated on the basis of your “separate & similar sale” selling prices.
Now I need a revenue engine to book my invoices
You need to review at inception, accrue the obligation when either party acts, and can’t record an invoice as a receivable until time is the only obstacle to collection. Invoices wash against contract assets.
The observation tool should work on components
VSOE is gone. You either (a) observe SSPs or sell at SSPs, or you (b) estimate “Separate & Similar Sale” Standalone Selling Prices. Components are not separate sales; and SSPs are supported by separate sales.
We keep our revenue nice and smooth for the shareholders
Today, under ASC 606 & IFRS 15, we recognize revenue on transfer to customers – volatile or not

10. Revenue Management ASC 606 and IFRS 15 Compliance Automation
ERP CLOUD
Cloud Service order, billing, & fulfillment data
Cloud Service General Ledger
Revenue Management
ASC 606 and IFRS 15 Compliance Automation
The Standard’s Five Steps to Revenue
Third party and On Premise (EBS) Sales Cycle Data
EBS General Ledger

11. The Famous Four Chevrons and Box: Steps 1-5 to Comply
US GAAP’s ASC and
IASB’s IFRS 15 RR
IPE
RMCS FUNCTIONALITY
Recognize Revenue When a Performance Obligation is Satisfied
Import Source
Data
Identify the
Separate
Performance Obligations
Identify the
Contract(s)
With Customer
Determine the Transaction Price
Allocate The Transaction Price
Accrue the Performance Obligation
Import
PD->PO->Contract Rules
Allocation
Accounting
“IPE” = Initial Performance Event, system event for “either party performing”

12. Transaction Price = Expected Consideration =
Getting started - Identify data needed to: Review Contracts and Allocate Prices at Inception
ASC 606 and IFRS 15 repeat the phrase “Review the Transaction at Inception and” several times
1. Contract ID # x
Transaction
Net Billing
Sale Price
Apparent Discount/ Premium
Standalone
Or ESP
Basis for Alloc.
4. Allocation
Revenue
& POb
Value
Discount
Allocation
Nets to Zero
True Discount
2. Perf. Obligation #1 40
(20) 60
95% * 60 = 57
17
(3)
Perf. Obligation #2 55 15
95% * 40 = 38
(17)
(2)
3. Transaction Price 95
Transaction Price = Expected Consideration = 0
Stand Alone Price
Contract Discount, SSP-Trx: =
100
(5)
95/100=95% relativity; a 5% discount
ASC 606 & IFRS 15’s 1st 4 steps
Identify the Accounting Contract
Identify the Promises to the Customers
Determine the Transaction Price
Allocate the Transaction Price to the Promises based on Separate Sale prices

13. Transaction Price = Expected Consideration =
Identify that Data in your ASC 605 or IAS 18 EBS Deployment The practical side of adopting the standard
What data do you need to identify & link contracts? Where is it?
Where should we read your customer facing pricing from? Orders? Price Lists?
Where will your SSP or ESPS come from? How will your match them to your PObs?
Do you know the business events that will represent either party acting, and will send us to book the accrued obligation? You might not be able to rely on invoicing.
Review the Transaction at Inception And…
1. Contract ID # x
Transaction
Net Billing
Sale Price
Apparent Discount
Standalone
Or ESP
Basis for Alloc.
4. Allocation
Revenue
& PO
Value
Discount
Allocation
Nets to Zero
True Discount
2. Perf. Obligation #1 40
(20) 60
95% * 60 = 57
17
(3)
Perf. Obligation #2 55 15
95% * 40 = 38
(17)
(2)
3. Transaction Price 95
Transaction Price = Expected Consideration = 0
Stand Alone Price
Contract Discount, SSP-Trx
95-100=
100
(5)
95/100=95% relativity; a 5% discount
What data do you need to identify POs? Where is it? How will you identify distinct? What is your Unit of Account?
Do you trust the total you are giving us? Have you a process in place to complete estimates before loading?
Do you know the business events that will represent transfer to customer, and will send us to recognize revenue? The 4 tests of GAAP are replaced with 7.
We’ll match your bills to your assets to follow this. What cross reference to use?
Identify the Accounting Contract 5. Determine whether the Promise is Point
Identify the Promises to the Customers in Time or Over Time
Determine the Transaction Price
Allocate the Transaction Price to the Promises

14. We are very close to the wire
Activate RMCS
606 / 15 GRC
RMCS
Adoption Ledger
Performance Obligation Accounting Subledger
System Cut Over Day
Revised 2018 Plan: Cut System over after Adoption Day
Today
ASC 606 / IFRS 15 Adoption Day
Deferred Revenue stops on cutover
Go ASC 606 / IFRS 15
Corporate “GAAP” Ledger
Topside Adjustments
Topside Adjustments
Start
Go Live #1 for Historical Data
Go Live #2 for Current Trxs
Go Live #3 for ASC 606 or IFRS 15 External Reporting
Go Live #4 in your current sub-ledgers
Initiate RMS
Iterative Modeling
Calculate the 606/15 value of your recent Deferred Revenue-ish transactions
Process Current Transactions using 606/15 Rules
Adopt The Standard – Stop reporting Deferred Revenue, Start 606/15
Support your external reporting with Subledger data

15. Program Agenda 1
Evolving Practice Integrating With EBS Integrating with Project Accounting 2 3

16. Extend with SaaS - HYBRID
Practical Paths to Oracle Cloud for EBS Customers Any Combination of these Paths – Journey to the Cloud
Migrate to SaaS
Migrate by pillar
Migrate by product line or business unit
Migrate by country/region
Avoid complex integration scenarios
Extend with SaaS - HYBRID
Supply Chain Planning Cloud
In-Memory Cost Mgt (IMCM)
Planning & Budgeting, Revenue Mgt
Adaptive Intelligent Apps
OTM, GTM and more….
So where are companies today
Many have started with the basics, migrating apps to the cloud
Next, we’re finding some companies begin to look to the cloud to augment their environments with SaaS solutions.
Finally, a select few are looking to develop entire new business models, looking for digital transformation, adopting the SaaS for their core business.
Replatform on OCI
Start with DEV/TEST
Add or migrate your DR on Cloud
Place your “Reporting” Env. on Cloud
Shift your PROD to Cloud when ready

17. Oracle Cloud Service Technology Imports The Selected Data
Native Integration Flows
Single common architecture for Employees, Users, Security, Geography, Customers, etc.
Requisition to Receipts  Supplier Invoice to Payment ; Expense Reports to Reimbursement
Period Close to Financial Reports; Budget to Approval
Credit Review to Approval 
Configure Quote to Order 
Customer Invoice to Receipt
Integration Services
Setup Services
Bulk Inbound/Outbound Services
Transactional Services
PaaS
PaaS
Integration Services
Pre-built
Pre-packaged
Native
ERP
Cloud
Pre-built Integrations
Integrated Quote-to-Cash with CPQ Cloud Service and Financials Cloud Service
Planning and Budgeting Cloud Service with Financials Cloud Service
Pre-packaged Integrations
Accounting Hub Reporting Service with EBS
Revenue Management Cloud Service with EBS
Integration Platform
Orchestrate Inbound/Outbound Bulk Data Flows across On-Premise, PaaS, and ERP Cloud
Orchestrate Setup/Transactional Services across On-Premise, PaaS, and ERP Cloud
Integration Platform

18. Import Sales Related Data – Overview of ETL (Extract, Transform, Load)
UCM:
Universal Content Manager
Source Applications
Revenue Management Cloud
Transform
Code hooks
Seeded Extract Views
Data Files
(Source headers, lines & sublines)
EBS
Load
Extract Revenue Basis Data program
Interface Tables
RM base tables
 Create Revenue Management Data Export File program
Load Interface File for Import Job (automatically triggered)
Revenue Management Daily Job Set
Extract
control file
3rd Party Application
Custom extract program
Register the new source Document Type 18

19. Pre-built integrations with EBS
Revenue Management Cloud
UCM
SLA
Sales Cycle Data
Performance Obligation Valuations
You & SI work together to identify data to pull, and business event drivers
Feedback
Other Sources
Data
Oracle E-Business Suite Subledgers
SLA
Oracle E-Business Suite General Ledger
Non-Oracle
Systems
Receivables
Order Management
And Others
Non-Oracle
Systems
Non-Oracle Spreadsheet
Custom
Oracle Financials Accounting Hub

20. Pre-built integrations with EBS

21. Pre-built integrations with EBS

22. Subledger & Ledgers Working with EBS Revenue Management Pre-Cutover
Cutover and Subsequently
ERP CLOUD
EBS General Ledger
Revenue Management
ASC 606 and IFRS 15 Compliance Automation
The Standard’s Five Steps to Revenue
Core GL
SLA
(Second)
Secondary
ASC 606 & IFRS 15
Optional
Secondary
Whether
National
Or Corporate
Primary
Corporate
Or National
Other EBS Sub-ledgers – Receivables, Payables,
Fixed Assets, Inventory, Costing, and so on, via SLA

23. Subledger & Ledgers Working with EBS Revenue Management Pre-Cutover
Cutover and Subsequently
ERP CLOUD
EBS General Ledger
Revenue Management
(Second)
Secondary
ASC 606 & IFRS 15
ASC 606 and IFRS 15 Compliance Automation
The Standard’s Five Steps to Revenue
Core GL
SLA
Optional
Secondary
Whether
National
Or Corporate
Primary
Corporate
Or National
Other EBS Sub-ledgers – Receivables, Payables,
Fixed Assets, Inventory, Costing, and so on, via SLA

24. Other Considerations and Points to be Noted
To get the data you need per your review at inception style analysis,
You can “copy and edit” views, with code hooks OR:
You can do a “third party integration”
It may or may not be captured in your current footprint, optimized for the old rules
Setup Utility to redirect EBS Receivables SLA Accounting to the RM Clearing Account in the Corporate EBS Ledger on cutover
AR Revenue Schedules remain available for use in EBS National / Taxation “old rules” ledgers
Output from RMCS drives EBS GL, Costing – “some assembly required”, discuss misc. integrations with OM, etc.

25. Program Agenda 1
Evolving Practice Integrating With EBS Integrating with Project Accounting 2 3

26. Performance Obligations in Projects
Capture and provide visibility to committed contractual Performance Obligations to drive accountability and delivery
1. Define Performance Obligations
Capture Contractual performance obligations that can support various types of contracts including,
Fixed Price
Time and Material
Cost Plus
Unit rate
Should be able to maintain and version performance obligations
2.Derive Progress
Capture progress at the lowest level where delivery of work can be confirmed
by measuring & reporting completed work quantities
or by capturing the Time and Cost
or by capturing Percent Completion
Summarize the progress at Performance Obligation level to assess the overall completion and gain customer agreement.
Progress should reconcile directly on the performance obligations
3. Recognize Revenue
Revenue should be based on the approved progress against the performance obligation
Rates (Transaction price) from the Performance obligation should be applied to approved progress quantities to generate revenue
For Bundled contracts the revenue for individual obligations should be recognized considering the overall contract discount .
Derive accurate progress against the Performance obligation to obtain approval from customer
Recognize revenue on the satisfied performance obligation and comply with accounting standards

27. Impacts to Balance Sheet and Income Statement
Impact on accounting is one of the major change that is occurring from this regulation
1) When the performance obligation starts , both assets and liabilities  arising out of it  are to be captured 
2) As and when the committed obligations are fulfilled, the revenue is recognized, and the liability is reduced 3) When invoicing is done , the assets gets reduced to that tune and it becomes Receivables.
Asset and liability created for amount of goods and services promised
Liability reduced and revenue recognized when performance obligations satisfied
Assets reduced when invoiced or payment is received for the goods and services provided
Contract
Fulfillment
Receipt

28. Define Performance Obligation (Projects)
Attributes to Performance Obligations
Performance Obligation Number
Description
Quantity
UOM
Transaction Price
Standalone Selling Price
Currency
While defining Performance obligations, These are the attributes that are to be captured at each performance Obligation line level.
Some of them are the additional attributes that are to be captured while integrating with RMCS.
Performance Obligation
Customer Name
Agreement Number
Expenditure Category
Expenditure Type
Revenue Category
Cost Rates and Mark up Percentage
Top Task Number

29. Progress of Performance Obligation
Revenue Method = Work
Typically Time and Material or Cost Plus type projects
Expenditure Type and Expenditure Category from Revenue Distribution mapped to the Performance Obligation
As discussed earlier,
The progress has to be captured at the least level where the delivery of work can be confirmed.
Such progress from the revenue distribution lines will be summarized at individual performance obligation line level.
For time & material or Cost plus projects, where typically work is defined as revenue method, Expenditure Type and Expenditure Category from Revenue Distribution lines are mapped to the Performance Obligation lines.
For fixed bid projects, where revenue method will be cost or event, Top Task from Revenue Distribution lines are mapped to the individual Performance Obligation lines
For unit rate based contracts, SOV lines are mapped to the performance obligation lines.
Revenue Method = Cost or Event
Typically Fixed Bid Project
Top Task from Revenue Distribution mapped to the Performance Obligation
Unit Rate Based / Schedule of Value
SOV line mapped to Performance Obligation

30. Progress of Performance Obligation
Oracle Confidential – Internal/Restricted/Highly Restricted
Progress of Performance Obligation
For RMCS integrated projects, Progress is reported only through Satisfaction events
these satisfaction events are created in Projects to report Progress
Progress should be in terms of Either Percentage or Quantity
Quantity is for Quantity based Pobg
And percentage is for currency based PObg

31. Recognize Revenue on Satisfied Performance Obligation
Revenue should be based on the approved progress against the performance obligation
Rates (Transaction price) from the Performance obligation should be applied to approved progress quantities to generate revenue
Contract Asset and Liability balances to be reflected as per ASC 606 and IFRS 15
For Bundled contracts the revenue for individual obligations should be recognized considering the overall contract discount
Revenue is derived based on approved progress coming from Projects through Satisfaction events against performance obligations
Against such approved progress the transaction price will be applied to generate revenue
Then the entries to the tune of revenue recognized will be posted on Contract Asset & liability accounts to reflect the current position after revenue
In case of Bundled contracts, the overall contract discount is considered while the revenue is recognized against each performance obligation line.

32. Integration to Cloud Revenue Management
In RMCS, a contract will be created with a combination of Project & Agreement
Under this contract, the individual performance obligation lines are created with the same combination of Project & Agreement
Progress against each performance obligation line will be passed to RMCS in terms of Satisfaction events.
Whatever revenue that is calculated in projects will not be interfaced to RMCS.
Integration to Cloud Revenue Management
Performance Obligation sent to Revenue Management when project starts
Progress sent on a periodic basis
Revenue Management allocates and recognizes Revenue

33. Revenue Management ASC 606 and IFRS 15 Compliance Automation
ERP CLOUD
Cloud Service order, billing, & fulfillment data
Cloud Service General Ledger
Revenue Management
ASC 606 and IFRS 15 Compliance Automation
The Standard’s Five Steps to Revenue
Third party and On Premise (EBS) Sales Cycle Data
EBS General Ledger

34. Questions? Revenue Management Thank you for joining us today!
ERP CLOUD
Thank you for joining us today!
Cloud Service order, billing, & fulfillment data
Cloud Service General Ledger
Revenue Management
ASC 606 and IFRS 15 Compliance Automation
The Standard’s Five Steps to Revenue
Third party and On Premise (EBS) Sales Cycle Data
EBS General Ledger