Reduction Order

Knowledge Center > Zuora RevPro > Reduction Order

Reduction Order

Order management allows you to return goods or services for various reasons. The reduction order (RO) is created in the upstream system and then collected to RevPro based on certain conditions. More details about complete and partial ROs, SSP normalization, accounting entries, and RO cancelation details are described in this article.

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 in terms. If the order has to be canceled or reduced, CM and SO update must be made to reduce the backlog to the appropriate amount.

To simplify the process, CM does not reduce SO and only RO can drive reduction on the original order. If an RO comes in with a reduction of terms or quantity, the RO must have reference to the original Sales Order Line ID. RevPro has the capability to understand the reduction and reduce the original sales order accordingly.

Processing Approach

To support this requirement, a new transaction type for reduction order, RORD, is available. With this transaction type, the original sales order to which this RO is associated can be identified. CM-RO is another new credit memo transaction type to support the reduction order processing.

When RO is collected into RevPro, RevPro adjusts the overall revenue for the term or quantity to be canceled based on the Start Date and End Date of the return order. All the schedules created are associated with the original sales order. If both sales order and invoice schedules are present for the same period, RORD will reverse the invoice schedules before the sales order schedules.

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

Transactional Approach

The following requirements must be met before RORD transactions can be processed in RevPro:

  • Extended Sell Price must be a negative value.
  • Extended List Price must be a negative value.
  • The ORIG_SO_LINE_ID value of the RORD line must be the same as the SO_Line ID of the original SO line.
  • The CANCEL_FLAG or RETURN_FLAG field needs not to be populated.

When a RORD line is collected, there are the following two circumstances:

  • Complete RORD (Cancelation for complete RORD) The amount in Deferred status and the amount in the Recognized status will be cleared if RORD value is the same as the value of the orignial SO.
    • The RETURN_FLAG field in the SO line will become Y.
    • The REC_AMOUNT, DEF_AMOUNT, and ALCTBL_AMOUNT values will become NULL.
    • The Extended FV Price and all FV related fields will become NULL.
    • The allocation will be updated based on the contract modification rules.
  • Partial RORD (Partial cancelation of sales order) If the SO or INV line is partially recognized, the amount in Deferred status will get cleared first. After that, the amount in Recognize status account will get cleared if the RORD value is greater than the amount in the Deferred status.
    • The RETURN_FLAG field in the SO line remains N.
    • The REC_AMOUNT, DEF_AMOUNT, and ALCTBL_AMOUNT values will change according to the Extended Sell Price of the RORD line.
    • The Extended FV Price and all FV related fields will be updated based on the changes in LIST_PRC, SELL_PRC, Order Quantity.PRC, SELL_PRC, and Order Quantity.
    • The allocation will be updated based on the contract modification rules.

SSP Normalization for RORD

When the RO line is collected for a sales order, the stand-alone selling price of the line gets normalized based on the RO value. The RO is based on the price, quantity, and term. The SSP value is calculated in two different ways based on the SSP value type. The type of the SSP value types can be Percentage or 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 RO comes with RORD transaction type 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

When the above data is collected, the Extended FV is calculated based on the net value of the 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, 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

When the above line is collected, the calculation for the Extended FV Price 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 the 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 hardware line gets recognized immediately and the maintenance and support lines are Contract Ratable for a year. The waterfall data 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 Jan-17 Period
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 Feb-17 Period
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 until December 2017. Now the return order is collected for the second line with the following values in 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 when ROs are collected are as follows:

  1. The return order is collected with the transaction type being RORD. 
  2. The Original Sales Order Line ID of the RO line must be the same as the SO Line ID of the original SO.
  3. Both the Extended Sell Price and Extended List Price should be negative.
  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 November Period
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 December Period 
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 when the CM-RO line is collected are as follows:

  1. The credit memo for return order is collected with the transaction type being CM-RO.
  2. The Sales Order Line ID of the CM-RO line must be the same as the Sales Order Line ID of RO. 
  3. Both the Extended Sell Price and Extended List Price must be a negative value. 
  4. The quantity needs to be maintained as a positive value.
  5. The amortization of revenue contract is not impacted by CM-RO.
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 November Period
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, the 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 is not present in the period, 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 present for the period, the contra amount is calculated based on the minimum of invoice schedule or RO schedule.

Accounting Entry for November Period

The following calculations are based on the details provided in the RO example section. Refer to 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 Contra AR    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 when CM-RO is collected are as follows:

  1. The credit memo for return order is collected as the CM-RO transaction type.
  2. The Sales Order Line ID of CM-RO must be same as Sales Order Line ID of RO.
  3. Both the Extended Sell Price and Extended List Price must be a negative value.
  4. The quantity needs to maintain as a positive value.
  5. The amortization of revenue contract is not impacted by the CM-RO collection.
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 November Period 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 Contra AR   100 RORD Entry
1000 * SO100-2 Contract Liability 100   CM-RO Entry
1000 * SO100-2 Contract Liability   100 CM-RO Entry
1000 * SO100-2 Contra AR 100   CM-RO Entry

Note: Entries marked with * are created for CM-RO collection.

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 impacted by the CM-RO collection.

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

Consider the sales order line below, which is 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 is 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 Jan-2017 Period
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 Feb-2017 Period
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

The accounting entry created is like above until the June 2017 period. There is no unbilled reversal from July 2017 to December 2017.

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 the 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

When the RO is collected, the 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 AR 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 canceled 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 AR 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 & Jun 2017 reversal of revenue against the invoice, the accounting entry shown below is for May 2017, which is identical to 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 happen against SO because no invoice schedule was created during that period. The accounting entry shown below is for the July-17 period 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 Cancelation

The return order created sometimes get canceled and collected to RevPro system from the upstream system. The transaction type used to collect those orders are still RORD but with the Cancel Flag being Y. The SO and invoice get 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 hardware line gets recognized immediately and the maintenance and support lines are Contract Ratable for a year. The waterfall data 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 Jan-2017 Period 
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 Feb-2017 Period 
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 until Dec 2017. Now the return order is collected for the 2nd line with the following values and collected in 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 when the return order is collected are as follows:

  1. The return order is collected with the transaction type being RORD. 
  2. The Original Sales Order Line ID of RO must be same as the SO Line ID of SO.
  3. Both the Extended Sell Price and Extended List Price must be a negative value.
  4. The quantity needs to be maintained as positive. 

Now the schedule for November and December are as follows:

Accounting Entry for the November Period 
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 December Period 
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 canceled with the Return Flag being Y. 

SO No Line No Tran Type Item Ext Sell Price Quantity Revenue Start Date Revenue End Date Cancel Flag
SO202 SO201-2 RORD Maintenance -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 November Period
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 for RORD with the Cancel Flag being Y.

Accounting Entry for the December Period 
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 for RORD with the Return Flag being 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 for RORD with the Return Flag being Y.

Complete the following points for RO cancelation:

  • For a complete RO Cancelation
    • 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 Cancelation

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