Progress billing and Cost recognition

Hi ​@Preeti Rayen 

Without a customization => We allocate COGS to the Project manually by entering Journal Transactions (GL) as shown in the screenshot below.

Best Regards,

Truong

​@nhatnghetinh - Thanks for the response - when we run billing from Appointments, it creates issue transaction and hits the cogs at that time, so should we manually reverse that as well? 

Hi ​@Preeti Rayen 

If Billing from the Appointment immediately creates an Issue Transaction and recognizes 100% of COGS, then you would need to manually reverse or defer the excess COGS through GL adjustments if your accounting policy is to recognize COGS in proportion to the revenue recognized.

I would not reverse the inventory Issue Transaction itself, because the materials have already been issued to the project. Instead, I would reverse the accounting impact (COGS) and recognize it progressively as revenue is recognized.

Example:

When the materials are issued to the project, Acumatica creates the following entry:
Dr COGS                     1,000
    Cr Inventory                    1,000
If only 10% of the project revenue is recognized in the current period, the accountant can make a manual GL adjustment to defer the remaining cost:
Dr Deferred Cost (or another appropriate asset account)    900
    Cr COGS                                                                                900

Note: In practice, the debit account should normally be a Deferred Cost (or another appropriate asset account) rather than Inventory, because the physical inventory has already been issued and is no longer on hand. The exact account depends on your company's accounting policies.

Best Regards,

NNT