Vision
RORD and CM-RO accounting entries
Beginning from version 37.001.00.00, if the RORD line is collected after the invoice line and the dates of the RORD line overlap with the dates of the invoice line, a contra entry will be created for the minimum value of the invoice amount and the return order amount. Then, the contra revenue reversal will happen when the CM-RO line is collected for the RORD amount later.
If the ratable method of the RORD parent line is one of the following types, the release of the RORD line will follow the same ratable method of its parent line based on the performance obligation that is satisfied for each open period. If there is no revenue scheduled for the open period, the RORD line will not be processed.
- Contract Ratable
- Ratable
- Immediate using start date
- Immediate using current open period
Scenario 1 - RORD collected after invoicing with overlap
In this scenario, the RORD line is collected after the invoice line and there is an overlap between the RORD dates and the invoice dates. Then, the contra entry will be created for the minimum value of the RORD amount and the invoice amount.
The current open period is Jan-2020. Both the SO line and the invoice line are collected in Zuora Revenue in January 2020.
| Line ID | Transaction Type | Ext. Sell Price | Allocatable | Start Date | End Date | Deferred | Recognized | Period ID |
|---|---|---|---|---|---|---|---|---|
| 1.1 | SO | 12000 | 12000 | 1/1/2020 | 12/31/2020 | 12000 | 0 | 202001 |
| 1.1 | INV | 12000 | 12000 | 1/1/2020 | 12/31/2020 | 12000 | 0 | 202001 |
The accounting entry is created as follows:
| Account Type | Dr | Cr | Period ID |
|---|---|---|---|
| Contract Liability | 12000 | 202001 |
Then, in the same period, the following RORD line is collected. The dates of the RORD line overlap with the dates of the invoice line. A contra entry will be created for $6000, which is the minimum of the RORD amount and the invoice amount.
| Line ID | Transaction Type | Ext. Sell Price | Allocatable | Start Date | End Date | Deferred | Recognized | Period ID |
|---|---|---|---|---|---|---|---|---|
| 1.1 | RORD | -6000 | -6000 | 7/1/2020 | 12/31/2020 | -6000 | 0 | 202001 |
After the RORD line is collected, the allocatable amount of the original SO line is decreased as follows.
| Line ID | Transaction Type | Ext. Sell Price | Allocatable | Start Date | End Date | Deferred | Recognized |
|---|---|---|---|---|---|---|---|
| 1.1 | SO | 12000 | 6000 | 1/1/2020 | 12/31/2020 | 12000 | 0 |
The accounting entries are created for the RORD line as follows:
| Account type | Dr | Cr | Period ID |
|---|---|---|---|
| Contract Liability | 12000 | 202001 | |
| Contract Liability | 6000 | 202001 | |
| Contra Revenue | 6000 | 202001 |
The contra revenue reversal happens when the CM-RO line is collected for the RORD amount later.
Scenario 2 - RORD release based on POB ratable method
In this scenario, the current open period is Jan-2020. Both the SO line and the invoice line are collected in Zuora Revenue in January 2020. The system settings are as follows:
- The POB ratable method is Contract Ratable and the accounting method is Partially Monthly.
- The INVOICE_CONTRACT_RATABLE profile is set to Y, which means the invoice revenue follows the contract ratable method.
The revenue has been 50% released in January 2020.
| Line ID | Transaction Type | Ext. Sell Price | Allocatable | Start Date | End Date | Deferred | Recognized | Period ID |
|---|---|---|---|---|---|---|---|---|
| 1.1 | SO | 12000 | 12000 | 1/1/2020 | 12/31/2020 | 6000 | 6000 | 202001 |
| 1.1 | INV | 12000 | 12000 | 1/1/2020 | 12/31/2020 | 6000 | 6000 | 202001 |
The accounting entries will be created as follows:
| Account type | Dr | Cr | Period ID |
|---|---|---|---|
| Contract Liability | 12000 | 202001 | |
| Contract Liability | 1000 | 202001 | |
| Revenue | 1000 | 202001 | |
| Contract Liability | 1000 | 202002 | |
| Revenue | 1000 | 202002 | |
| Contract Liability | 1000 | 202003 | |
| Revenue | 1000 | 202003 | |
| Contract Liability | 1000 | 202004 | |
| Revenue | 1000 | 202004 | |
| Contract Liability | 1000 | 202005 | |
| Revenue | 1000 | 202005 | |
| Contract Liability | 1000 | 202006 | |
| Revenue | 1000 | 202006 |
In the Jul-2020 period, the RORD line is collected. The dates of the RORD line overlap with the dates of the invoice line. The RORD revenue will not be released because there is no revenue schedule in the RORD periods.
| Line ID | Transaction Type | Ext. Sell Price | Allocatable | Start Date | End Date | Deferred | Recognized | Period ID |
|---|---|---|---|---|---|---|---|---|
| 1.1 | RORD | -6000 | -6000 | 7/1/2020 | 12/31/2020 | -6000 | 0 | 202007 |
A contra entry is created for $6000 the Jul-2020 period and the accounting entries are as follows:
| Account type | Dr | Cr | Period ID |
|---|---|---|---|
| Contract Liability | 6000 | 202007 | |
| Contra Revenue | 6000 | 202007 |
When the remaining 50% of the revenue is released in Jul-2020 period, the following accounting entries are created:
| Account type | Dr | Cr | Period ID |
|---|---|---|---|
| Contract Liability | 1000 | 202007 | |
| Revenue | 1000 | 202007 | |
| Contract Liability | 1000 | 202007 | |
| Revenue | 1000 | 202007 | |
| Contract Liability | 1000 | 202008 | |
| Revenue | 1000 | 202008 | |
| Contract Liability | 1000 | 202008 | |
| Revenue | 1000 | 202008 | |
| Contract Liability | 1000 | 202009 | |
| Revenue | 1000 | 202009 | |
| Contract Liability | 1000 | 202009 | |
| Revenue | 1000 | 202009 | |
| Contract Liability | 1000 | 202010 | |
| Revenue | 1000 | 202010 | |
| Contract Liability | 1000 | 202010 | |
| Revenue | 1000 | 202010 | |
| Contract Liability | 1000 | 202011 | |
| Revenue | 1000 | 202011 | |
| Contract Liability | 1000 | 202011 | |
| Revenue | 1000 | 202011 | |
| Contract Liability | 1000 | 202012 | |
| Revenue | 1000 | 202012 | |
| Contract Liability | 1000 | 202012 | |
| Revenue | 1000 | 202012 |
Scenario 3 - CM-C line collected after RORD
In this scenario, a CM-C line is collected after the RORD line has knocked off the invoice schedule. The CM-C line will be converted to CM-RO for the invoice amount that is knocked off by the RORD line.
The current open period is Jan-2020. Both the SO line and the invoice line are collected in Zuora Revenue in January 2020. The POB ratable method is Immediate using current open period.
| Line ID | Transaction Type | Ext. Sell Price | Allocatable | Start Date | End Date | Deferred | Recognized | Period ID |
|---|---|---|---|---|---|---|---|---|
| 1.1 | SO | 12000 | 1200 | 1/1/2020 | 12/31/2020 | 0 | 1200 | 202001 |
| 1.1 | INV | 12000 | 1200 | 1/1/2020 | 12/31/2020 | 0 | 1200 | 202001 |
The accounting entries are created as follows:
| Account type | Dr | Cr | Period ID |
|---|---|---|---|
| Contract Liability | 1200 | 202001 | |
| Contract Liability | 1200 | 202001 | |
| Contra Revenue | 1200 | 202001 |
In the Feb-2020 period, the RORD line is collected for $300. The dates of the RORD overlap with the dates of the invoice. The release of the RORD line follows the POB ratable method of the SO line.
| Line ID | Transaction Type | Ext. Sell Price | Allocatable | Start Date | End Date | Deferred | Recognized | Period ID |
|---|---|---|---|---|---|---|---|---|
| 1.1 | RORD | -300 | -300 | 12/1/2020 | 12/31/2020 | 0 | -300 | 202002 |
A contra entry will be created for $300, which is the minimum of the RORD amount and the invoice amount. The accounting entries are as follows:
| Account type | Dr | Cr | Period ID |
|---|---|---|---|
| Contract Liability | 300 | 202002 | |
| Contra Revenue | 300 | 202002 | |
| Contract Liability | 300 | 202002 | |
| Contra Revenue | 300 | 202002 |
Then, the CM-C line is collected in the Mar-2020 period.
| Line ID | Transaction Type | Ext. Sell Price | Allocatable | Start Date | End Date | Deferred | Recognized | Period ID |
|---|---|---|---|---|---|---|---|---|
| 1.1 | CM-C | -1200 | -1200 | 12/1/2020 | 12/31/2020 | 0 | -1200 | 202003 |
After the CM-C line is processed, a portion of the CM-C amount is converted to CM-RO amount. The converted amount equals to the RORD amount, which is $300 in this example.
| Account type | Dr | Cr | Period ID | Note |
|---|---|---|---|---|
| Contract Liability | 300 | 202003 | CM-RO entry | |
| Contra Revenue | 300 | 202003 | Contra reversal | |
| Contract Liability | 300 | 202003 | Contra reversal | |
| Contract Liability | 900 | 202003 | CM-C | |
| Contract Liability | 900 | 202003 | Invoice reversal | |
| Revenue | 900 | 202003 | Invoice reversal | |
| Contract Liability | 900 | 202003 | Unbilled recognize | |
| Revenue | 900 | 202003 | Unbilled recognize |