Cost of Goods Sold (COGS) Recognition Amount Incorrect for Zero Dollar Invoice

(Doc ID 1932923.1)

Last updated on APRIL 20, 2017

Applies to:

Oracle Receivables - Version 12.1.3 and later
Information in this document applies to any platform.

Symptoms

You have a Zero dollar Invoice, for Equipment which has an Accounting Rule to Defer the Cost and Revenue over 24 months.

The AR transaction Distribution screen shows the Revenue lines over 24 months, which has 0% Distributions for 23 months and the 24th month has 100%.

This is creating issues on Cost of Goods Sold (COGS) Recognition, where the expectation is that the Cost get deferred over 24 months uniformly, with 4.167% each month.

The Invoice now shows the percentages correctly for the distributions, after the fix provided in <Patch 18513332>.

Now, the COGS reports are incorrect. 
The desired result was to have 4.167% of 62.06 being relieved from Def COGS and moved to COGS and not the whole 62.06 USD.

From Costing:
A few notes:
===============
1. The issue is Revenue recognition rather than Costing related.
The Revenue is being recognized 100% (based on cogsdiag.sql output - cogs.lst as attached to the SR). Once that is recognized at that level it fully recognizes costs. Moves all from DCOGS to COGS.

********************************************
CST_REVENUE_RECOGNITION_LINES Data
********************************************
REVENUE_RECOGNITION_PERCENT
1

Section of the diagnostic. 1 indicates 100%. If this is 0 or .25 or .5 or .75 it would move the proper amount of cost over from DCOGS to COGS. Here is is moving the full cost because revenue has been fully recognized.

2. The problem is - Basically AR Support (and Sameer) is saying

********************************************
CST_REVENUE_RECOGNITION_LINES Data table
********************************************
shouldn't be progressed to that point (Basically it should not be 100%, but rather whatever percent determined by deferred revenue)

Based on the etrm description of the table:

This table is populated with data from Order Management (OM) and Oracle Receivables (AR) about the revenue recognition percentage for a given OM line. AR data is loaded via an API they provide during the 2nd phase of the Generate COGS Recognition Events concurrent request.

AR is indeed the primary owner of the data that is inserted in this table, thus they should be the ones populating correctly. I'm just getting some final verifications and I'll discuss directly with Sameer, but Costing uses that data for the matching priniciple and if AR API is populating CST_REVENUE_RECOGNITION_LINES with 100% Revenue recognized...well, you can see where there is a problem.

Costing Development has confirmed the issue lies with Revenue recognition.

3. Prescribed fix:

AR data is loaded via an API they provide during the 2nd phase of the Generate COGS Recognition Events concurrent request.
This would need to be fixed to properly populate CST_REVENUE_RECOGNITION_LINES column: REVENUE_RECOGNITION_PERCENT

Cause

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