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Reduction Order

Order management allows you to return goods or services for various reasons. The Reduction Order (RO) gets created in the upstream and collected to RevPro based on certain conditions. More details about Complete and Partial ROs, SSP Normalization, Accounting Entries, and RO Cancellation details are described below.

Business Case

RevPro takes CM and RO accordingly. Otherwise, Sales Order (SO) update has to happen to reduce the order. An Order can be partially billed in Quantity or Terms. If the order has to be cancelled or reduced, a CM and SO updates have to be made to reduce the backlog to the appropriate amount. To simplify the process, CM will not reduce SO and only let RO to drive reduction on the original order. Assume that RO will be coming in with quantity or reduction of terms. RO will have reference to Original Sales Order Line ID. RevPro has the capability to understand the reduction and reduce the original SO accordingly.

RevPro Approach

To support this requirement, new transaction types are available. RORD is the new transaction type. With that you can identify that this RO is associated to the Original Sales Order. CM-RO is a new Credit Memo Transaction Type to support the RO processing.

When RO is collected in to RevPro, RevPro adjusts the overall revenue for the term or quantity to be cancelled. The system will defer based on the Start Date and End Date of the Return Order. All the schedules created are associated with the Original Sales Order. The priority for RORD is to reverse the schedules of invoices and then it will consider the Sales Order schedules, if both SO and Invoice schedules are present for the same period.

Whenever there is a collection, all the ROs that are in the Stage are picked for the collection process and they go through the iteration process.

RO's Transactional Approach

Consider the following conditions before performing RORD transactions:

  • Extended Sell Price should be a negative value
  • Extended List Price should be a negative value
  • RORD line should have ORIG_SO_LINE_ID that is the same as that of SO_Line id of Transaction type SO
  • CANCEL_FLAG/RETURN_FLAG needs not be populated.

When we collect the RORD line we have two scenarios:

  • Complete RORD (Cancellation for complete RORD) The amount in Deferred status and Recognized status will be cleared if RORD Value is the same as that of SO.
    • RETURN_FLAG in the SO line will become Y.
    • REC_AMOUNT, DEF_AMOUNT, and ALCTBL_AMOUNT will become NULL.
    • Extended FV Price and all FV related columns will become NULL.
    • Allocation should be updated in accordance to contract modification setup.
  • Partial RORD (Partial Cancellation of sales order) If the SO/INV is partially recognized, then the amount in Deferred status will get cleared first. After that the amount in Recognize status account will get cleared if RORD is greater than Recognize status amount.
  1. RETURN_FLAG will remain N.
  2. REC_AMOUNT, DEF_AMOUNT, and ALCTBL_AMOUNT will change according to the RORD Extended Sell Price.
  3. Extended FV Price and all FV related columns will be changed based on changes in LIST_PRC, SELL_PRC, and Order Quantity.PRC, SELL_PRC, and Order Quantity.
  4. Allocation should be updated in accordance to contract modification setup.

SSP Normalization for RORD

While collecting the Return Order for a Sales Order, the stand alone selling price of the line gets normalized based on the value of the Return Order. The Return Order is based on the price, quantity, and term. The SSP value gets calculated in two different ways based on SSP value type. The SSP value types are: Percentage and Amount.

Scenario 1 – SSP Type as Percentage

Consider the following example if the SSP type is Percentage.

S. No Tran Type SO No So Line No SO Line Id Item Qty Ext List Price Ext Sell Price FV % Ext FV Price Allocated CV
2001 SO SO-1001 SO1001-1 10001 Hardware 2 1000 800 75 750 801.53 1.53
2002 SO SO-1001 SO1001-2 10002 Software 2 800 600 70 560 598.47 -1.53
Total 1400   1310    

Extended FV Price = Ext. List Price * FV percent

The Return order comes with Tran Type RORD for the two lines with order quantity.

S. No Tran Type SO No So Line No SO Line Id Item Qty Ext List Price Ext Sell Price
2001 RORD SO-1001 SO1001-3 10001 Hardware 1 -500 -400
2002 RORD SO-1001 SO1001-4 10002 Software 1 -400 -300

While collecting the data from the above table, the Extended FV is calculated based on the net value of Extended List Price.

S. No Tran Type SO No So Line No SO Line Id Item Qty Ext List Price Allocation Price FV % Ext SSP Price Allocated CV
1 SO SO-1001 SO1001-1 10001 Hardware 2 1000 400 75 375 400.76 .76
2 SO SO-1001 SO1001-2 10002 Software 2 800 300 70 280 299.24 -.76
Total 700   655    

Net Extended List Price = 500 (1000-500)

Extended SSP price = 375 (500*.75)

Scenario 2 – SSP Type as Amount

If SSP Type is Amount, then the extended SSP is calculated based on the following formula:

Extended SSP = FV price * Quantity * Term

Term = Revenue End date - Revenue Start Date

SO Line Id Item Qty Ext List Price Ext Sell Price Allocatable Start Date End Date Term FV Price Ext FV Allocated CV
SO20001 Hardware 1 1000 800 800 01-Jan-17 01-Jan-17 1 900 900 777.78 -22.22
SO20002 Maintenance 1 720 600 600 01-Jan-17 31-Dec -17 12 60 720 622.22 22.22
Total 1400         1620    

Consider the RO that comes for the maintenance line for three months for example, from October to December of 2017.

Tran Type SO Line Id Item Qty Ext List Price Ext Sell Price Start Date End Date Term
RORD SO20003 Maintenance 1 -180 -150 01-Oct-17 31-Dec-17 3

While the above line is collected, the calculation for the Extended FV price calculation happens as listed below.

SO Line Id Item Qty Ext List Price Ext Sell Price Allocatable Start Date End Date Term FV Price Ext FV Allocated CV
SO20001 Hardware 1 1000 800 800 01-Jan-17 01-Jan-17 1 900 900 777.78 -22.22
SO20002 Maintenance 1 540 450 450 01-Jan-17 31-Sep -17 9 60 540 622.22 22.22
Total 1250         1440    

Accounting Entries for RO

RO Example

Consider a Sales Order with values listed below:

SO No Line No INV No INV Line No Item Ext Sell Price Currency Quantity Revenue Start Date Revenue End Date
SO100 SO100-11 INV 100 INV100-1 Hardware 1200 USD 1 01/01/2017 01/01/2017
SO100 SO100-2 INV 100 INV100-2 Maintenance 600 USD 12 01/01/2017 31/12/2017
SO100 SO100-3 INV 100 INV100-2 Support 360 USD 12 01/01/2017 31/12/2017

In this example, the first line Hardware gets recognized immediately whereas Maintenance and Support are contract ratable for a year. The Waterfall method followed for the lines are as follows:

SO No Line No Item Currency JAN-17 FEB-17 MAR-17 APR-17 ... OCT-17 NOV-17 DEC-17
SO100 SO100-1 Hardware USD 1200              
SO100 SO100-2 Maintenance USD 50 50 50 50   50 50 50
SO100 SO100-3 Support USD 30 30 30 30   30 30 30
Accounting Entry for the Period Jan-17
RC ID Line No Account Type Currency Debit Credit Comments
1000 SO100-1 Contract Liability USD   1200 Initial Entry
1000 SO100-2 Contract Liability USD   600 Initial Entry
1000 SO100-3 Contract Liability USD   360 Initial Entry
1000 SO100-11 Contract Liability USD 1200   Rev Rec Entry
1000 SO100-11 Revenue USD   1200 Rev Rec Entry
1000 SO100-2 Contract Liability USD 50   Rev Rec Entry
1000 SO100-2 Revenue USD   50 Rev Rec Entry
1000 SO100-3 Contract Liability USD 50   Rev Rec Entry
1000 SO100-3 Revenue USD   30 Rev Rec Entry
Accounting Entry for the Period Feb-17
RC ID Line No Account Type Currency Debit Credit Comments
1000 SO100-2 Contract Liability USD 50   Rev Rec Entry
1000 SO100-2 Revenue USD   50 Rev Rec Entry
1000 SO100-3 Contract Liability USD 30   Rev Rec Entry
1000 SO100-3 Revenue USD   30 Rev Rec Entry

The same type of accounting entry is created untill December 2017. Now the Return Order is collected for the second line with the following values and collected in the month of November.

Tran Type SO No Line No Item Ext Sell price Quantity Currency Revenue Start Date Revenue End Date
RORD SO101 So1001-1 Maintenance -100 12 USD 11/01/2017 12/31/2017

The data points to be considered while collecting ROs are as follows:

  1. The Return order is collected with Tran Type as RORD. 
  2. The original Sales Order Line Id of RO should be the same as SO Line ID of SO.
  3. Both the Extended Sell price and Extended List price should be as – ve.
  4. The quantity needs to be maintained as positive.

Based on these details, the possible two scenarios are as follows: 

Schedule Entries If Profile Is Not Enabled

If CREATE_RORD_CONTRA_ENTRY profile is not enabled, the following will be the schedule for the month of November and December:

Accounting Entry for the Period November
RC ID Line No Account Type Currency Debit Credit Comments
1000 SO100-2 Contract Liability USD 50   Rev Rec Entry
1000 SO100-2 Revenue USD   50 Rev Rec Entry
1000 * SO100-2 Contract Liability USD   50 RORD Entry
1000 * SO100-2 Revenue USD 50   RORD Entry

Note: Entries marked with * are created when an RO is collected.

Accounting Entry for the Period December 
RC ID Line No Account Type Currency Debit Credit Comments
1000 SO100-22 Contract Liability USD 50   Rev Rec Entry
1000 SO100-22 Revenue USD   50 Rev Rec Entry
1000 * SO100-23 Contract Liability USD   50 RORD Entry
1000 * SO100-23 Revenue USD 50   RORD Entry

Note: Entries marked with * are created when an RO is collected.

The Amortization value for the Revenue Contract are as follows: 

SO No Line No Item Currency JAN-17 FEB-17 MAR-17 APR-17 ... OCT-17 NOV-17 DEC-17
SO100 SO100-1 Hardware USD 1200              
SO100 SO100-2 Maintenance USD 50 50 50 50   50 50 50
SO100 * SO100-2 Maintennace USD             (50) (50)
SO100 SO100-3 Support USD 30 30 30 30   30 30 30

Note: Entries marked with * are created when an RO is collected. 

The credit memo for return order lines are collected with transaction type CM-RO and it reverses the contra revenue created at the time of Return order collection.

The data points to be considered while collecting Credit Memo Return Order are as follows:

  1. The Credit memo for Return order is collected with Tran type as CM-RO.
  2. The Sales Order Line ID of CM_RO should be the same as Sales Order Line ID of RO. 
  3. Both the Extended Sell price and Extended list price should be in negative (-) value. 
  4. The quantity needs to be maintained as a positive (+) value.
  5. The Amortization of Revenue contract does not get impacted on collecting credit memo for the return order.
Tran Type SO No SO Line No Invoice No Invoice Line No Item Currency Ext. Sell Price
CM-RO SO101 SO100-1 INV101 INV1001-1 Maintenance USD -100
Accounting Entry for the Period November
RC ID Line No Account Type Currency Debit Credit Comments
1000 SO100-2 Contract Liability USD 50   Rev Rec Entry
1000 SO100-2 Revenue USD   50 Rev Rec Entry
1000 * SO100-2 Contract Liability USD   50 RORD Entry
1000 * SO100-2 Revenue USD 50   RORD Entry
1000 * SO100-2 Contract Liability USD  100   Initial Entry

Note: Entries marked with * are created when an RO is collected.

Schedules Profile is Enabled

The following example shows when a profile is enabled for Contra Revenue creation.

When the profile is set as Y, then Contra entry is created during November and RO is also collected.

Logic to Calculate the Amount to be booked under RO Contra Account

Contra amount calculated on the period is based on the RO schedules value and invoice schedule value.

If either of the two not present in the period then the Contra amount calculated on the period is based on the RO schedules value and invoice schedule value.

If both invoice schedule and contra schedule are presented for the period, then contra amount is calculated based on the minimum of invoice schedule or RO schedule.

Accounting Entry for the Period November

The following calculations are based on the details provided in the RO Example section. Refer the above section for more details.

RC ID Line No Account Type Debit Credit Comments
1000 SO100-2 Contract Liability 50   Rev Rec Entry
1000 SO100-2 Revenue   50 Rev Rec Entry
1000  SO100-2 Contract Liability   50 RORD Entry
1000  SO100-2 Revenue 50   RORD Entry
1000 * SO100-2 Contract Liability  100   Contract Revenue Entry
1000 * SO100-2 Contract Revenue    100 Contract Revenue Entry

Note: Entries marked with * are created when an RO is collected.

The credit memo for return order lines are collected with transaction type CM-RO and it reverses the contra revenue created at the time of Return order collection.

The data points to be considered while collecting Credit Memo Return Order are as follows:

  1. The Credit memo for Return order is collected with Tran type as CM-RO.
  2. The Sales Order Line ID of CM-RO should same as Sales Order Line ID of RO.
  3. Both the Extended Sell price and Extended list price should be in negative (-) value.
  4. The quantity needs to maintain as a positive (+) value.
  5. The Amortization of Revenue contract does not get impacted on collecting credit memo for the return order.
Tran Type SO No SO Line No Invoice No Invoice Line No Item Currency Ext Sell Price
CM-RO SO101 SO1001-1 INV101 INV1001-1 Maintenance USD -100
Accounting Entry for the Period November Based on the Previous Scenario
RC ID Line No Account Type Debit Credit Comments
1000 SO100-2 Contract Liability 50   Rev Rec Entry
1000 SO100-2 Revenue   50 Rev Rec Entry
1000 SO100-2 Contract Liability   50  RORD Entry
1000 SO100-2 Revenue 50    RORD Entry
1000 SO100-2 Contract Liability 100   RORD Entry
1000 SO100-2 Contract Revenue   100 RORD Entry
1000 * SO100-2 Contract Liability 100   CM-RO Entry
1000 * SO100-2 Contract Liability   100 CM-RO Entry
1000 * SO100-2 Contract Revenue 100   CM-RO Entry

Note: Entries marked with * are created when Tran Type CMRO is collected.

The Amortization value for the Revenue Contract are as follows:

SO No Line No JAN-17 FEB-17 MAR-17 APR-17 ... OCT-17 NOV-17 DEC-17
SO100 SO100-1 1200              
SO100 SO100-2 50 50 50 50   50 50 50
SO100 SO100-2             (50) (50)
SO100 SO100-3 30 30 30 30   30 30 30

In the above table, you can find that the Amortization value is not getting impacted while collected the CMRO transaction type.

Scenario: RO for the line which is Partially recognized in SO and Partially in Invoice

Consider the sales order line below which get recognized upon booking.

Tran Type So No So Line No Item Ext Sell Price Currency Revenue Start Date Revenue End Date Comments
SO SO300 SO300-1 Maintenance 600 USD 01/01/2017 12/31/2017 SO collected

For the above sales order, the Partial invoice collected as follows:

Tran Type So No So Line No Item Ext Sell Price Currency Revenue Start Date Revenue End Date Comments
INV INV300 INV300-1 Maintenance 300 USD 01/01/2017 12/31/2017 INV collected

When the above line is recognized upon booking and the ratable method is upon booking, the schedule for the line is as follows.

Accounting Entry for the Period Jan-2017
RC ID Line No Account Type Currency Debit Credit Comments
3000 SO300-1 Contract Liability USD 50   Recognize at SO
3000 SO300-1 Revenue USD   50 Recognize at SO
3000 SO300-1 Contract Liability USD   300 Initial Entry for Invoice
3000 SO300-1 Contract Liability USD   50 Un Bill Reversal
3000 SO300-1 Revenue USD 50   Un Bill Reversal
3000 SO300-1 Contract Liability USD 50   Recognize at Bill
3000 SO300-1 Revenue USD   50 Recognize at Bill
Accounting Entry for the Period Feb-2017
RC ID Line No Account Type Currency Debit Credit Comments
3000 SO300-1 Contract Liability USD 50   Recognize at SO
3000 SO300-1 Revenue USD   50 Recognize at SO
3000 SO300-1 Contract Liability USD   50 Un Bill Reversal
3000 SO300-1 Revenue USD 50   Un Bill Reversal
3000 SO300-1 Contract Liability USD 50   Recognize at Bill
3000 SO300-1 Revenue USD   50 Recognize at Bill

Accounting entry created like above until the period June 2017. There is no unbilled reversal from the period July 2017 to December 2017, since no billing for that period.

The Amortization value for the Revenue Contract are as follows: 

SO No Line No Item Currency JAN-17 FEB-17 MAR-17 APR-17 ... OCT-17 NOV-17 DEC-17
SO100 SO100-1 Maintenance USD 50 50 50 50   50 50 50

Now the return order comes with following details: 

Tran Type So No So Line No Item Ext Sell Price Currency Revenue Start Date Revenue End Date Comments
RORD SO301 SO301-1 Maintenance -450 USD 04/01/2017 12/31/2017 RORD collected

While collecting the RO, accounting entry for April 2017 to December 2017 is as follows:

RC ID Line No Account Type Currency Period Debit Credit Comments
3000 SO300-1 Contract Liability USD Apr-2017 50   Recognize at SO
3000 SO300-1 Revenue USD Apr-2017   50 Recognize at SO
3000 SO300-1 Contract Liability USD Apr-2017   50 Un Bill Reversal
3000 SO300-1 Revenue USD Apr-2017 50   Un Bill Reversal
3000 SO300-1 Contract Liability USD Apr-2017 50   Recognize at Bill
3000 SO300-1 Revenue USD Apr-2017   50 Recognize at Bill
3000 SO300-1 Contract Liability USD Apr-2017   50 RORD Entry
3000 SO300-1 Revenue USD Apr-2017 50   RORD Entry
3000 SO300-1 Contract Liability USD Apr-2017 150   Contra Revenue Entry if profile enabled
3000 SO300-1 Contra Revenue USD Apr-2017   150

Contra Revenue Entry if profile enabled 

Recognize at Bill

Credit Memo for the return order collected is listed below: 

Tran Type INV No INV Line No Item Ext Sell Price Currency Revenue Start Date Revenue End Date Comments
CM-RO INV301 INV301-1 Maintenance -150 USD 04/01/2017 12/31/2017 CM-RO collected

Note: Credit Memo for the invoice schedule cancelled by return order (300-150). 

Accounting Entry on collecting CM-RO
RC ID Line No Account Type Currency Period Debit Credit Comments
3000 SO300-1 Contract Liability USD Apr-2017 50   Recognize at SO
3000 SO300-1 Revenue USD Apr-2017   50 Recognize at SO
3000 SO300-1 Contract Liability USD Apr-2017   50 Un Bill Reversal
3000 SO300-1 Revenue USD Apr-2017 50   Un Bill Reversal
3000 SO300-1 Contract Liability USD Apr-2017 50   Recognize at Bill
3000 SO300-1 Revenue USD Apr-2017   50 Recognize at Bill
3000 SO300-1 Contract Liability USD Apr-2017   50 RORD Entry
3000 SO300-1 Revenue USD Apr-2017 50   RORD Entry
3000 SO300-1 Contract Liability USD Apr-2017 150   Contra Revenue Entry if profile enabled
3000 SO300-1 Contra Revenue USD Apr-2017   150

Contra Revenue Entry if profile enabled 

Recognize at Bill

3000 SO300-1 Contract Liability USD Apr-2017 150   Initial Entry for CM-RO
3000 SO300-1 Contract Liability USD Apr-2017   150 Reversal Contra Revenue on CM-RO
3000 SO300-1 Revenue USD Apr-2017 150   Reversal Contra Revenue on CM-RO

For the period, May 2017 & Jun2017 reversal of revenue against the invoice, the accounting entry shown below is for May -17 which is Identical as June 2017.

RC ID Line No Account Type Currency Period Debit Credit Comments
3000 SO300-1 Contract Liability USD May-2017 50   Recognize at SO
3000 SO300-1 Revenue USD May-2017   50 Recognize at SO
3000 SO300-1 Contract Liability USD May-2017   50 Un Bill Reversal
3000 SO300-1 Revenue USD May-2017 50   Un Bill Reversal
3000 SO300-1 Contract Liability USD May-2017 50   Recognize at Bill
3000 SO300-1 Revenue USD May-2017   50 Recognize at Bill
3000 SO300-1 Contract Liability USD May-2017   50 RORD Entry
3000 SO300-1 Revenue USD May-2017 50   RORD Entry

All the periods from July-17 to December- 17, reversals happened against SO since no Invoice schedule was created during that period. The Accounting Entry shown below is for the Period July-17 and it is identical till Dec -17.

RC ID Line No Account Type Currency Period Debit Credit Comments
3000 SO300-1 Contract Liability USD May-2017 50   Recognize at SO
3000 SO300-1 Revenue USD May-2017   50 Recognize at SO
3000 SO300-1 Contract Liability USD May-2017   50 Un Bill Reversal
3000 SO300-1 Revenue USD May-2017 50   Un Bill Reversal

Amortization value of the revenue contract has no impact from CM – RO.

Amortization value of the above line is created as follows: 

SO No Line No Item Currency JAN-17 FEB-17 MAR-17 APR-17 ... OCT-17 NOV-17 DEC-17
SO100 SO100-1 Maintenance USD 50 50 50

50

(50)

 

50

(50)

50

(50)

50

(50)

RO Cancellation

Return Order created sometimes get cancelled and collected to RevPro system from the upstream. The transaction type used to collect those orders are still RO but with the cancel flag Y. SO and Invoice gets collected in Revpro system.

SO No Line No Tran Type Item Ext Sell price Quantity Revenue Start Date Revenue End Date
SO200 SO200-1 SO Hardware 1200 1 01/01/2017 01/01/2017
SO200 SO200-2 SO Maintenance 600 12 01/01/2017 12/31/2017
SO200 SO200-3 SO Support 360 12 01/01/2017 12/31/2017

In this example, the first line Hardware gets recognised immediately whereas Maintenance and Support are contract ratable for a year. The Waterfall method followed for the lines are as follows: 

SO No Line No JAN-17 FEB-17 MAR-17 APR-17 ... OCT-17 NOV-17 DEC-17
SO200 SO200-1 1200              
SO200 SO200-2 50 50 50

50

 

50

50

50

SO200 SO200-3 30 30 30 30   30 30 30
Accounting Entry for the Period Jan-2017 
RC ID Line No Account Type Debit Credit Comments
2001 SO200-1 Contract Liability   1200 Initial Entry
2001 SO200-2 Contract Liability   600 Initial Entry
2001 SO200-3 Contract Liability   360 Initial Entry
2001 SO200-1 Contract Liability 1200   Rev Rec Entry
2001 SO200-1 Revenue   1200 Rev Rec Entry
2001 SO200-2 Contract Liability 50   Rev Rec Entry
2001 SO200-2 Revenue   50 Rev Rec Entry
2001 SO200-3 Contract Liability 30   Rev Rec Entry
2001 SO200-3 Revenue   30 Rev Rec Entry
Accounting Entry for the Period Feb-2017 
RC ID Line No Account Type Debit Credit Comments
2001 SO200-2 Contract Liability 50   Rev Rec Entry
2001 SO200-2 Revenue   50 Rev Rec Entry
2001 SO200-3002 Contract Liability 30   Rev Rec Entry
2001 SO200-33002 Revenue   30 Rev Rec Entry

The same type of accounting entry is created till Dec 2017. Now the Return Order is collected for the 2nd line with the following values and collected in the month of November. 

SO No Line No Tran Type Item Ext Sell price Quantity Revenue Start Date Revenue End Date
SO201 SO2001-1 RORD Maintenance -100 12 11/01/2017 12/31/2017

The data points to be considered while collecting Return order are as follows:

  1. The Return order is collected with Tran Type as RORD. 
  2. The original Sales Order Line Id of RO should same as SO Line ID of SO.
  3. Both the Extended Sell price and Extended List price should be as – ve.
  4. The quantity need to maintained as positive. 

Now the schedule for the Month of November and December are as follows:

Accounting Entry for the Period November 
RC ID Line No Account Type Debit Credit Comments
2001 SO200-2 Contract Liability 50   Rev Rec Entry
2001 SO200-2 Revenue   50 Rev Rec Entry
2001 SO200-2 Contract Liability   50 RORD Entry
2001 SO200-2 Revenue 50   RORD Entry
Accounting Entry for the Period December 
RC ID Line No Account Type Debit Credit Comments
2001 SO200-2 Contract Liability 50   Rev Rec Entry
2001 SO200-2 Revenue   50 Rev Rec Entry
2001 SO200-2 Contract Liability   50 RORD Entry
2001 SO200-2 Revenue 50   RORD Entry

The Amortization value of the Revenue Contract is as follows: 

SO No Line No JAN-17 FEB-17 MAR-17 APR-17 ... OCT-17 NOV-17 DEC-17
SO200 SO200-1 1200              
SO200 SO200-2 50 50 50 50   50 50 50
SO200 SO200-2             (50) (50)
SO200 SO200-3 30 30 30 30   30 30 30

Now return is cancelled with the return flag Y. 

SO No Line No Tran Type Item Ext Sell Price Quantity Revenue Start Date Revenue End Date Cancel Flag
SO202 SO201-2 RORD Maintennace -100 12 11/01/2017 12/31/2017 Y

Now the schedule for the month of November and December are as follows: 

Accounting Entry for the Period November 
RC ID Line No Account Type Debit Credit Comments
2001 SO200-2 Contract Liability 50   Rev Rec Entry
2001 SO200-2 Revenue   50 Rev Rec Entry
2001  SO200-2 Contract Liability   50 RORD Entry
2001 SO200-2 Revenue 50   RORD Entry
2001 * SO200-2 Contract Liability  50   RORD Cancel Entry
2001 * SO200-2 Revenue    50 RORD Cancel Entry

Note: Entries marked with * are created when Tran Type RORD with Cancel Flag as Y gets collected.

Accounting Entry for the Period December 
RC ID Line No Account Type Debit Credit
2001 SO200-2 Contract Liability 50  
2001 SO200-2 Revenue   50
2001  SO200-2 Contract Liability   50
2001 SO200-2 Revenue 50  
2001 * SO200-2 Contract Liability  50  
2001 * SO200-2 Revenue    50

Note: Entries marked with * are created when Tran Type RORD with Return Flag as Y.

The Amortization value of the Revenue Contract is as follows: 

SO No Line No JAN-17 FEB-17 MAR-17 APR-17 ... OCT-17 NOV-17 DEC-17 Comments
SO200 SO200-11 1200               Rev Rec Entry
SO200 SO200-2 50 50 50 50   50 50 50 Rev Rec Entry
SO200 SO200-2             (50) (50) RORD Entry
SO200* SO200-2             50 50 RORD Cancel Entry
SO200 SO200-3 30 30 30 30   30 30 30 Rev Rec Entry 

Note: Entries marked with * are created when Tran Type RORD with Return Flag as Y.

Complete the following points for RO cancellation:

  • For a complete RO Cancellation
    • RETURN flag will change from Y to N.
    • Extended FV Price and all FV related columns will be populated again as before.
  • For a partial RO
    • RETURN_FLAG will remain as N.
    • Extended FV Price and all FV related columns will be same.

Schedules for RO Cancellation

  • For a complete or partial RO, a Contra AR entry is created and if it is not posted then the entry will be removed from the schedules table.
  • The RORD schedules will get reversed for the amount of RORD cancellation brought in.
  • If RORD cancellation comes after the RC is posted then the schedules will contain two Contra AR entries, one created at the time of RORD collected and the other at the time of RORD reversal is collected.
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