Results Analysis and

International Accounting Standard (IAS)

Contents: Introduction ........................................................................................................................................................ 2

Valuation Based On Different Accounting Principles ..........................................................................................2 Cost-Based POC Method................................................................................................................................... 3

Posting Example ...................................................................................................................................................4 Postings in Financial Accounting .................................................................................................................4 Report in Controlling Similar to COS Accounting ............................................................................................5 Report in Controlling Similar to Period Accounting..........................................................................................5 Order Report in Controlling...............................................................................................................................7

Planned Costs.......................................................................................................................................................7 Offset of Customer Down Payments with Work in Process.......................................................................... 9

Posting Example ...................................................................................................................................................9 Reserves for Imminent Loss ........................................................................................................................... 11

Posting Example ................................................................................................................................................ 12 Offset of Reserves for Imminent Loss with Work in Process ..................................................................... 14

Posting Example ................................................................................................................................................ 14 POC Method Based On Other Percentages of Completion ......................................................................... 17

Quantity-Based POC Method............................................................................................................................ 17 POC Method Based On Project Progress ........................................................................................................ 17 POC Method Based On Billing Plan or Periodic Planned Revenue ................................................................ 18 Revenue-Based POC Method........................................................................................................................... 18

Applying the Percentage of Completion of an Object to Subordinate Objects......................................... 19 Completed Contract Method ........................................................................................................................... 19 Apportionment/Account Assignment of Revenue in Excess of Billings.................................................... 19

Trading Partner Number and Other Characteristics ........................................................................................ 20 Parallel Ledger Solution .................................................................................................................................. 20 Runtime Considerations with Multiple Valuations ....................................................................................... 20 Activity Received But No Invoice ................................................................................................................... 21 Resource-Related Billing/Fixed Price ............................................................................................................ 21 Shipping Items of a Sales Order for Make-to-Order Production ................................................................. 21 Valuated Project Stock .................................................................................................................................... 21 Excluding Certain Overhead Costs ................................................................................................................ 22 Differentiation Against SD Revenue Recognition and the Accrual Engine ............................................... 22 Valuation Based On German GAAP (HGB).................................................................................................... 22

1

Introduction Results analysis was developed for companies with long-term orders. We regard orders as long-term if it takes more than approximately one year to complete them. For Controlling requirements or for balance sheet purposes, such objects need to be valuated at regular intervals. With large quantities of objects, for mid-year statements, or for the requirements of Controlling, however, results analysis for objects with shorter life cycles may be customary or even required. The following text discusses the possibilities of using results analysis for valuation based on IAS.

Valuation Based On Different Accounting Principles In principle, results analysis supports all common accounting principles such as HGB, IAS, and US GAAP. Many requirements are supported directly by methods in Customizing, while others can usually be realized through customer enhancements in results analysis. It should be kept in mind that R/3 Controlling can only be based on one accounting principle and that results analysis uses the Controlling data for valuation. This results in limitations for results analysis with respect to parallel valuation based on multiple accounting principles, which can be compensated for to some extent by customer enhancements. It is possible to use more than one valuation procedure in parallel. Usually not more than two valuation procedures are needed, such as one for local valuation and one for valuation based on IAS. The simplest solution is to represent this with two results analysis versions. Note that only results analysis version 0 can be used in Profitability Analysis, while it is possible to post the inventories and reserves of all results analysis versions to Financial Accounting. In Financial Accounting, the posted inventories and reserves for each valuation procedure are represented by a particular set of accounts. This reflects the SAP recommendation to represent valuation based on multiple accounting principles through accounts. It is also possible to have the postings for a second valuation procedure consist of just the differences against the first basic valuation procedure. Release 4.7 also includes the option of linking the posting rules to an accounting principle (see Parallel Ledger Solution).

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Cost-Based POC Method A typical IAS method is the determination of the percentage of completion (POC) based on costs:

POC = Cumulative Actual Costs / Planned Costs of Valuation This results in Costs Affecting Net Income = POC * Planned Costs of Valuation / Cumulative Actual Costs Revenue Affecting Net Income = POC * Planned Revenue of Valuation The expression Costs Affecting Net Income can be understood as the cost of sales in a general sense. Another term for the expression Revenue Affecting Net Income is recognized revenue. The costs and revenues affecting net income and any reserves for imminent loss are settled to the profit. In this case a revenue in excess of billings or a revenue surplus would be posted to Financial Accounting. The values are calculated as follows: If Revenue Affecting Net Income > Cumulative Actual Revenue, then Revenue in Excess of Billings = Revenue Affecting Net Income - Cumulative Actual Revenue, Revenue Surplus = 0. If Revenue Affecting Net Income < Cumulative Actual Revenue, then Revenue in Excess of Billings = 0 Revenue Surplus = Cumulative Actual Revenue - Revenue Affecting Net Income Revenue in Excess of Billings is also called Work in Process, POC Revenue, Recognized Revenue in Excess of Billed Revenue, or Unbilled Revenue. Revenue Surplus is also called Revenue Reserve, Billed Revenue in Excess of Recognized Revenue, or Deferred Revenue. In the present solution the revenue in excess of billings and the revenue surplus are posted to G/L accounts rather than to customer accounts. The cost-based POC method is represented by results analysis method 03 or results analysis type E with profit indicator Q.

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Posting Example A product is manufactured for a customer in a make-to-order environment. The planned cost is 8,000 EUR and the planned revenue is 9,000 EUR. There is to be no variance in the actuals against plan. Results analysis and the calculated clearing postings are each run at the end of the month. These clearing entries are posted to the accounts highlighted in brown. A highly simplified model with the accounts Cash on Hand Allocated Overhead and Production Costs is used to represent the output hours.

Postings in Financial Accounting

Balance Sheet P&L

Asset Side Liabilities Side Cost Side Revenue Side

Material Components

Dr Cr (1) 3,000 (5) 0,500

Cash Allocated

Overhead Dr Cr (1) 4,000 (5) 0,500

Revenue in Excess of Billings Dr Cr (2) 7,865 (4) 7,865

Receivable Dr Cr (3) 9,000

Revenue Surplus Dr Cr (6) 1,135

(4) 1,135

Production Costs

Dr Cr (1) 3,000 (1) 4,000 (5) 0,500 (5) 0,500

Reserve Change

Dr Cr (4) 1,135

(6) 1,135

Revenue Dr Cr

(3) 9,000

Inventory Change Dr Cr (4) 7,865

(2) 7,865

1. January 2004: Material components and labor to Expenses

2. 1/31/2004: Post Recognized Revenue in Excess of Billed Revenue (9000 * 7000 / 8000 = 7865)

3. February 2004: Invoicing, no expense

4. 2/28/2004: Clear Recognized Revenue in Excess of Billed Revenue, post Revenue Surplus (Billed Revenue in Excess of Recognized Revenue) (9000 - 7865 = 1135)

5. March 2004: Material components and labor for follow-up costs to Expenses

6. 3/31/2004: Clear Revenue Surplus

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The appropriate posting rules are:

… Category Balance/ Creation/ Con-sump-tion

Cost Element

Re-cord Seq. No.

P&L Account Balance Sheet Account

… POCB 0 Inventory Change Account

Revenue in Excess of Billings Account

… POCU 0 Reserves Change Account

Revenue Surplus Account

Report in Controlling Similar to COS Accounting

COS Accounting Report

Januar

y

February

March

Total

Revenue (affecting net income) 7865 1135 900

0

Cost (of sales) - 7000 1000 8000

Result = 865 135 1000

Period Accounting Report

January

February

March

Total

Revenue 9000 9000

Inventory change + 7865 -7865 0

Costs - 40003000 500

500 8000

Reserve change - 1135 -1135 0

Result = 867 0 135 1000

1. January 2004: Material components and labor to Expenses

2. March 2004: Material components and labor for follow-up costs to Expenses

Report in Controlling Similar to Period Accounting

1. January 2004: Material

components and labor to Expenses

2. 1/31/2004: Post Work in Process

3. February 2004: Billing

4. 2/28/2004: Clear Work in Process, post Reserves for Unrealized Costs

5. March 2004: Material components and labor for follow-up costs to Expenses

6. 3/31/2004: Usage of reserve

5

6

Order Report in Controlling

1. January 2004: Material

components and labor to Expenses

2. February 2004: Billing

3. March 2004: Material components and labor for follow-up costs to Expenses

Planned Costs The determination of planned costs is of central significance to the cost-based POC method. There are the following options:

Order Report

Plan Actual

January

February

March

Total

-9000 Revenue -9000 -9000

8000 Production Costs

30004000 500

500 8000

-1000 Total 7000 -9000 1000 -1000

• Store the planned costs for valuation with orders and projects on a special version. • Update the planned costs, which tends to be more suitable for long-term objects. • Compare the planned values (as part of results analysis) against the actuals and if necessary

automatically adjust the planned values of the valuation. This is represented with the parameters valuation basis and overrun, as well as with customer enhancement 2 of results analysis. As a rule, this means that in the case that the cumulative actual costs exceed the planned costs, the planned costs of valuation are replaced by the cumulative actual costs.

• Valuate the planned values in the Project System based on Updated Costs. The updated costs consist of actual costs and expected costs. This is represented with the valuation basis U and V.

• The planned values of valuation can be composed of the actual costs of the WBS elements with the status technically completed and the planned values of the WBS elements that do not have the status technically completed. This is represented with project structure C.

• Update the planned costs of valuation by results analysis, which documents the changes in plan that affect results analysis. Updating the plan values should be switched off in the results analysis version (Note 457469).

• Assign plan-actual variances to special line IDs. This is represented with the overrun parameter. • With the results reserve it is possible to reduce the plan result of valuation as a lump sum.

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The arrows indicate where the parameters mentioned are to be found in the valuation method.

The Write Plan Values indicator is in the Extended Control of the results analysis version.

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Offset of Customer Down Payments with Work in Process Customer down payments can be added to the work in process (such as the revenue in excess of billings) or offset with separate accounts (Note 448150). This is controlled with the Commitment parameter in the valuation method.

Posting Example A product is manufactured for a customer in a make-to-order environment. The planned cost is 8,000 EUR and the planned revenue is 9,000 EUR. There is to be no variance in the actuals against plan. Results analysis and the calculated clearing postings are each run at the end of the month. These clearing entries are posted to the accounts highlighted in brown and asterisked. A highly simplified model with the accounts Cash on Hand Allocated Overhead and Production Costs is used to represent the output hours. The appropriate posting rules for this example are:

… Category Balance/ Creation/ Con-sump-tion

Cost Element

Re-cord Seq. No.

P&L Account Balance Sheet Account

… POCB 0 Inventory Change Account

Revenue in Excess of Billings Account

… POCU 0 Reserves Change Account

Revenue Surplus Account

ANKB 0 Down Payment Clearing Account

Reduction of Revenue in Excess of Billings Account

ANUS 0 Down Payment Clearing Account

Surplus from Down Payment Account

The account entered in the P&L account column does not have to be a P&L account. The headings are appropriate for the simple inventory and reserve postings. The lines for the categories ANKB and ANUS are postings between balance sheet accounts.

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Balance Sheet P&L

Asset Side Liabilities Side Cost Side Revenue Side

Material Components

Dr Cr (01) 3,000 (13) 0,500

Cash Allocated

Overhead Dr Cr (01) 4,000 (13) 0,500

Cash Payment, Down

Payment Dr Cr (03) 4,000 (05) 4,000 (07) 0,900 (09) 0,100

Receivable

Dr Cr (07) 8,900

(07) 8,900

(11) 0,100

(11) 0,100

Revenue in Excess of

Billings*) Dr Cr (02) 7,865 - (08) 7,865

Reduction of Revenue in

Excess of Billings*) Dr Cr (08) 7,865 (04) 4,000 (06) 3,865

Down Payment Dr Cr (07) 8,000

(03) 4,000

(11) 0,100

(05) 4,000

(09) 0,100

Revenue Surplus*)

Dr Cr (14) 1,135

(08) 1,035

(12) 0,100

Down Payment

Clearing*) Dr Cr (04) 4,000 (08) 8,000(06) 4,000 (12) 0,100(10) 0,100

Surplus from Down

Payment*) Dr Cr (08) 135 (06) 135 (12) 100 (10) 100

Production Costs

Dr Cr (01) 3,000 (01) 4,000 (13) 0,500 (13) 0,500

Reserve Change*)

Dr Cr (08) 1,035

(14) 1,135

(12) 0,100

Revenue Dr Cr

(07) 8,900

(11) 0,100

Inventory Change*)

Dr Cr (08) 7,865

(02) 7,865

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The numbers in parentheses, which are included in the postings to the accounts, correspond to the numbering in the following list.

1. January 2004: Material components and labor to Expenses

2. 1/31/2004: Post Recognized Revenue (Unbilled Receivable, Recognized Revenue in Excess of Billed Revenue) (Actual Costs / Planned Costs * Planned Revenue = 7000 / 8000 * 9000 = 7865)

3. February 2004: Down payment

4. 2/28/2004: Reduce Revenue in Excess of Billings, clear down payment

5. March 2004: Down payment

6. 3/31/2004: Reduce inventory, surplus from down payment

7. April 2004: Billing and payment

8. 4/30/2004: Clear Revenue in Excess of Billings and Surplus from Down Payment, post Revenue Surplus (Billed Revenue in Excess of Recognized Revenue) (8900 - 7865 = 1035)

9. May 2004: Down payment

10. May 31, 2004: Surplus from down payment

11. June 2004: Billing and payment

12. 6/30/2004: Post revenue surplus, clear surplus from down payment

13. July 2004: Material components and labor for follow-up costs to Expenses

14. 7/31/2004: Clear Revenue Surplus

The Commitments parameter in the valuation method

Reserves for Imminent Loss Results analysis calculates a reserve for imminent loss with the following formula:

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If Planned Cost of Valuation > Planned Revenue of Valuation: Planned Loss = Planned Cost of Valuation – Planned Revenue of Valuation Realized Loss = POC * Planned Loss Reserve for Imminent Loss = Planned Loss – Realized Loss

Posting Example A product is manufactured for a customer in a make-to-order environment. The planned cost is 8,000 EUR and the planned revenue is 7,000 EUR. There is to be no variance in the actuals against plan. Results analysis and the calculated clearing postings are each run at the end of the month. These clearing entries are posted to the accounts highlighted in brown. A highly simplified model with the accounts Cash on Hand Allocated Overhead and Production Costs is used to represent the output hours.

Balance Sheet P&L

Asset Side Liabilities Side Cost Side Revenue Side

Material Components

Dr Cr (3) 3,000 (7) 0,500

Cash Allocated

Overhead Dr Cr (3) 4,000 (7) 0,500

Revenue in Excess of

Billings Dr Cr (4) 6,125 (6) 6,125

Receivable Dr Cr (5) 7,000

Revenue Surplus Dr Cr (8) 0,875 (6) 0,875

Reserves for

Imminent Loss Dr Cr (4) 0,875 (2) 1,000 (8) 0,125

Production Costs

Dr Cr (3) 3,000 (3) 4,000 (7) 0,500 (7) 0,500

Reserve Change

Dr Cr (6) 0,875 (8) 0,875

Reserves for Imminent

Loss Change Dr Cr (2 ) 1,000 (4) 0,875 (8) 0,125

Revenue Dr Cr (5) 7,000

Inventory Change

Dr Cr (6) 6,125

(4) 6,125

1. January 2004: Objected created and costed

2. 1/31/2004: Post Reserve for Imminent Loss (8000 - 7000 = 1000)

3. February 2004: Material components and labor to Expenses

4. 2/28/2004: Post Revenue in Excess of Billings (7000 * 7000 / 8000 = 6125) and realize loss (1000 * 7000 / 8000 = 875)

5. March 2004: Invoicing, no expense

6. 3/31/2004: Clear Revenue in Excess of Billings, post Revenue Surplus (7000 - 6125 = 875)

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7. April 2004: Material components and labor for follow-up costs to Expenses

8. 4/30/2004: Clear revenue surplus and realize loss

The appropriate posting rules are:

… Category Balance/ Creation/ Con-sump-tion

Cost Element

Re-cord Seq. No.

P&L Account Balance Sheet Account

… POCB 0 Inventory Change Account

Revenue in Excess of Billings Account

… POCU 0 Reserves Change Account

Revenue Surplus Account

POCV 0 Reserves for Imminent Loss Change Account

Reserves for Imminent Loss Account

POCR 0 Reserves for Imminent Loss Change Account

Reserves for Imminent Loss Account

With some methods, results analysis category RDVL is used instead of POCV and POCR (see Note 602707).

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Offset of Reserves for Imminent Loss with Work in Process Reserves for imminent loss can be added to the work in process (such as the revenue in excess of billings) or offset with separate accounts (Notes 550573, 562609, 563795). This is controlled with the Method of Apportionment Reserves for Imminent Loss parameter in the valuation method. For revenue in excess of billings, for example, the method of apportionment is E (Note 562609).

The parameter Method of Apportionment Reserves for Imminent Loss in the valuation method

Posting Example A product is manufactured for a customer in a make-to-order environment. The planned cost is 8,000 EUR and the planned revenue is 7,000 EUR. There is to be no variance in the actuals against plan. Results analysis and the calculated clearing postings are each run at the end of the month. These clearing entries are posted to the accounts highlighted in brown. A highly simplified model with the accounts Cash on Hand Allocated Overhead and Production Costs is used to represent the output hours.

The appropriate posting rules for this example are:

… Category Balance/ Creation/ Con-sump-tion

Cost Element

Re-cord Seq. No.

P&L Account Balance Sheet Account

… POCB 0 Inventory Change Account

Revenue in Excess of Billings Account

… POCU 0 Reserves Change Account

Revenue Surplus Account

POCV 0 Reserves for Imminent Loss Change Account

Reserves for Imminent Loss Account

POCR 0 Reserves for Imminent Loss Change Account

Reserves for Imminent Loss Account

RDVA 0 Reserves for Imminent Loss Change Account

Reduction of Revenue in Excess of

14

Billings Account

15

Balance Sheet P&L

Asset Side Liabilities Side Cost Side Revenue Side

Material Components

Dr Cr (3) 3,000 (7) 0,500

Cash Allocated

Overhead Dr Cr (3) 4,000 (7) 0,500

Revenue in Excess of

Billings Dr Cr (4) 6,125 (6) 6,125

Reduction of Revenue in

Excess of Billings Dr Cr (6a) 0,125 (4a) 0,125

Receivable Dr Cr (5) 7,000

Revenue Surplus Dr Cr (8) 0,875 (6) 0,875

Reserves for

Imminent Loss Dr Cr (4) 0,875 (2) 1,000 (4a) 0,125 (6a) 0,125 (8) 0,125

Production Costs

Dr Cr (3) 3,000 (3) 4,000 (7) 0,500 (7) 0,500

Reserve Change

Dr Cr (6) 0,875

(8) 0,875

Reserves for Imminent

Loss Change Dr Cr (2 ) 1,000 (4) 0,875 (8) 0,125

Revenue Dr Cr

(5) 7,000

Inventory Change

Dr Cr (6) 6,125

(4) 6,125

1. January 2004: Objected created and costed

2. 1/31/2004: Post Reserve for Imminent Loss (8000 - 7000 = 1000)

3. February 2004: Material components and labor to Expenses

4. 2/28/2004: Post Revenue in Excess of Billings (7000 * 7000 / 8000 = 6125) and realize loss (1000 * 7000 / 8000 = 875) and [4a] offset the remaining Reserve for Imminent Loss of 125 with the Revenue in Excess of Billings

5. March 2004: Invoicing, no expense

6. 3/31/2004: Clear Revenue in Excess of Billings, post Revenue Surplus (7000 - 6125 = 875) and [6a] clear the offset of the Reserve for Imminent Loss with the Revenue in Excess of Billings

7. April 2004: Material components and labor for follow-up costs to Expenses

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8. 4/30/2004: Clear revenue surplus and realize loss

POC Method Based On Other Percentages of Completion There are other approaches besides the percentage of completion (POC) based on costs. In all of the following methods, as with the special case of the cost-based POC method, you determine the costs and revenues affecting net income as follows:

Costs Affecting Net Income = POC * Planned Costs of Valuation Revenue Affecting Net Income = POC * Planned Revenue of Valuation As a rule, Costs Affecting Net Income ≠ Cumulative Actual Costs Revenues Affecting Net Income ≠ Cumulative Actual Revenues For this reason there will be work in process and reserves both on the revenue side and on the cost side:

If Revenue Affecting Net Income > Cumulative Actual Revenue, then Revenue in Excess of Billings = Revenue Affecting Net Income - Cumulative Actual Revenue, Revenue Surplus = 0. If Revenue Affecting Net Income < Cumulative Actual Revenue, then Revenue in Excess of Billings = 0 Revenue Surplus = Cumulative Actual Revenue - Revenue Affecting Net Income If Costs Affecting Net Income < Cumulative Actual Costs, then Capitalized Costs = Cumulative Actual Costs – Costs Affecting Net Income Reserves for Unrealized Costs = 0 If Costs Affecting Net Income > Cumulative Actual Costs, then Capitalized Costs = 0 Reserves for Unrealized Costs = Costs Affecting Net Income – Capitalized Costs Work in process is another term for capitalized costs. The costs affecting net income can also be called the cost of sales in a general sense.

Quantity-Based POC Method The quantity-based POC method calculates the percentage of completion as follows: POC = Cumulative Actual Quantity / Planned Quantity With sales orders, the quantities can be the delivery quantity or the invoiced quantity (quantity base A and B). It is possible to use the statistical key figure ABGMNG with all objects (quantity base C). The planned quantity of statistical key figure ABGMNG must be maintained with the standard planning transaction or can be set in customer enhancement 2 of results analysis (for example at a constant 100). The actual quantity of statistical key figure ABGMNG can be maintained with transactions KKG1, KKG2, and KKG3 of results analysis or can be derived in customer enhancement 2 of results analysis. The quantity-based POC method is represented by results analysis method 05 or results analysis type M with profit indicator Q.

POC Method Based On Project Progress Projects have a separate, complex method of determining the progress. The project progress value can be used by results analysis.

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The POC method based on the project progress value is represented by results analysis method 07 or results analysis type L with profit indicator Q.

POC Method Based On Billing Plan or Periodic Planned Revenue The sales order can use the billing plan to derive the percentage of completion. Results analysis apportions the planned revenues for the intervals of the billing plan to the periods between them. All objects can use the periodic planned revenue to derive the percentage of completion. The POC is calculated as follows: POC = Cumulative Planned Revenue / Planned Revenue The POC method based on the billing plan is represented by results analysis type E, profit indicator R, and profit basis G or H. The POC method based on the periodic planned revenue is represented by results analysis method 06 or results analysis type E with profit indicator R.

Revenue-Based POC Method The revenue-based POC method calculates the percentage of completion as follows: POC = Cumulative Actual Revenue / Planned Revenue The following applies in this special case: Revenue Affecting Net Income = POC * Planned Revenue of Valuation = Cumulative Actual Revenue The revenue-based POC method is represented by results analysis method 01 (results analysis type E, profit indicator M).

The parameters Results Analysis Type and Profit Indicator and Profit Basis (mentioned with the POC based on periodic planned revenue)

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Applying the Percentage of Completion of an Object to Subordinate Objects Projects and sales orders have a structure. Results analysis runs on only some of the objects in the structure and summarizes the values of the remaining objects to the objects for which results analysis is being run. Sometimes it is desirable to apply the percentage of completion of the entire object to subordinate objects. You can use the parameter POC_OBJEKTNUMMER (Note 682426) of customer enhancement 2 of results analysis to specify the object number of the object that carries the percentage of completion of the entire object. This is possible for the quantity-based POC method and the POC method based on the project progress. There is no defined solution for the cost-based POC method. In principle, it would be possible to represent the percentage of completion of the entire object with the statistical key figure ABGMNG (profit basis C) for the quantity-based POC method. The percentage of completion of the entire object could be calculated in a separate run, in a separate results analysis version, before results analysis of the subordinate objects, or the calculation of the POC could be integrated into results analysis of the subordinate objects using the customer enhancements. If the company code currency is not the same as the controlling area currency, there will be a percentage of completion for each currency; the quantity of a second statistical key figure can be evaluated with customer enhancement 2.

Completed Contract Method With the Completed Contract Method, the costs and revenues affecting the net income are calculated as follows: The object does not have the status X

Costs affecting net income = 0 Revenue affecting net income = 0

and therefore Capitalized Costs = Cumulative Actual Costs Revenue Surplus = Cumulative Actual Revenues The object has the status X

Costs Affecting Net Income = Cumulative Actual Costs Revenue Affecting Net Income = Cumulative Actual Revenue

and Capitalized Costs = 0

Revenue Surplus = 0 Status X is usually the status Final Billing or Technically Completed. However, it can be any other status. The quantity-based POC method is represented by results analysis method 09 or results analysis type E with profit indicator C.

Apportionment/Account Assignment of Revenue in Excess of Billings In the standard system, the revenue in excess of billings is updated as a separate value for each object. The value can therefore be posted to only one G/L account for each company code. The same applies to the revenue surplus. Sometimes an additional or more detailed differentiation is desirable here. There are the following options:

• Apportioning the values to the revenue line IDs to update them to different results analysis cost elements. The assignment of the revenue line IDs is based on the revenue elements. Note 38070 describes such a solution.

• Changing the results analysis cost element in customer enhancement 4 of results analysis on the basis of characteristics in the master record of the object.

The different results analysis cost elements enable differentiated account determination in the posting rule. For example, the revenue in excess of billings can be posted to different G/L accounts for the different relationship types between the companies (separate, affiliated, associated, etc.) .

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Trading Partner Number and Other Characteristics The BADI K_SETTLEMENT_1 enables information such as the following to be added to the posting document:

• Trading partner number (Note 619443) • Transaction type (Note 654231) • Partner profit center (Note 654817) • Functional area (Note 664059)

Parallel Ledger Solution Results analysis supports the parallel ledger solution. This is an alternative to the method of representing the valuation with multiple accounting principles using accounts. The parallel ledger solution is available from Release 4.7. This solution enables the lines of the posting rules to be assigned to an accounting principle.

The Accounting Principle parameter in the posting rule.

Runtime Considerations with Multiple Valuations To keep runtimes down, it may be useful to:

• Represent two valuation procedures with only one results analysis version. The standard system provides profit indicators P and U, which combine revenue-based and cost-based POC determination. The decision to use profit indicators P and U depends on whether the profit is to be reported in costing-based profitability analysis (CO-PA) based on costs or revenue. In both cases, the values of both methods are present for the postings of the inventories and reserves in Financial Accounting. However, representing two valuation procedures with only one results analysis version usually requires a customer enhancement.

• Valuate only the objects with both methods whose valuation result actually differs. This frequently affects only the objects whose order value is higher than a certain amount.

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Activity Received But No Invoice Sometimes you may want to include a received activity in the valuation of an object in results analysis even though no vendor invoice has been received. To achieve this, you can in principle use the following value categories:

• Manual commitment (Commitment parameter = F or Customer enhancement 5, parameter ADD_OBLIGO_MANUELL = X [Note 607406])

• Actual costs from parked documents (Customer enhancement 5, parameter ADD_IST_VORERFASST = X [Note 620112])

• Vendor down payments (Commitment parameter = C or Customer enhancement 5, parameter CREDIT_ANZAHLUNG_ABWEISEN = " ")

Resource-Related Billing/Fixed Price Valuation using dynamic items (results analysis method 15) calculates the revenue in excess of billings ("revenue to be received" in the graphic) with a billing document simulation of the costs yet to be billed. With certain objects this satisfies the requirements of IAS. With fixed-price projects, for example, it is still necessary to valuate the object with a percentage of completion. The figure shows how valuation with dynamic items can represent the inventories in the profit and loss statement.

Results analysis with resource related billing

Shipping Items of a Sales Order for Make-to-Order Production Sales orders for make-to-order production sometimes contain shipping items. You may want to include these shipping items in results analysis in some way. In principle, this can be achieved with the customer enhancements of results analysis, but there is no standard solution.

Valuated Project Stock

Costs invoiced

revenue

Costs to be invoiced

Revenue for costs to be

revenue + work in process (= revenue for costs to be invoiced) – costs (= costs invoiced + costs to be invoiced) = POC result

POC method „COS method“

revenue + work in process (= costs to be invoiced) – costs (= costs invoiced +

P&L

costs to be invoiced)

FI

P&L

= COS result

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Sometimes you may want to have the consumption used to create the valuated project stock or sales order stock in production flow directly into valuation. Note 616869 describes a possible solution.

Excluding Certain Overhead Costs It is possible to exclude from valuation certain overhead costs that were allocated to an object. Provided that such costs were allocated with particular cost elements, the cost elements are assigned to a special line ID and the line ID is given the category N or D. If the values of this special line ID are to be settled to profitability analysis, the category must be D. In some conditions you select the special function C in the valuation method as a supplement. Then the planned values of the special line ID are not included in the calculation of reserves for imminent loss.

Differentiation Against SD Revenue Recognition and the Accrual Engine SD revenue recognition runs on SD orders to which no costs can be assigned and that therefore have no CO object. It is specially adapted to time- or quantity-based revenue recognition of sales orders and contracts. In a similar way this also applies to the accrual engine, which however offers more functionality in principle.

Valuation Based On German GAAP (HGB) On average, valuation based on IAS reports the profit of an order earlier than is possible with German GAAP (HGB). For valuation based on German GAAP, only the revenue-based POC method or the completed contract method are suitable if used as a special case of the revenue-based POC method with orders with only one billing document and without reserve processing. In addition to the interpretation of the IAS inventory as "unbilled or POC revenue", since the profit is reported earlier with IAS than with German GAAP, this can also be interpreted as a higher valuation of the work in process, namely at revenue rates (IAS) instead of at cost rates (German GAAP). In valuation based on German GAAP, another factor is which overhead costs can be capitalized and which cannot. This is particularly difficult if overhead costs that cannot be capitalized are contained for example in the prices of activity allocation. Here results analysis offers the capability of defining the assignment of costs to line IDs using percentages of overhead costs that cannot be capitalized:

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