11/28/2017 Document 867912.

COGS and DCOGS Workflow Example of a Revenue / COGS matching for a Sales Order (Doc ID
867912.1)

In this Document

Abstract
History
Details
Summary
References

APPLIES TO:

Oracle Cost Management - Version 12.0.0 and later

Information in this document applies to any platform.

ABSTRACT

The following scenario illustrate a short example of a Revenue / COGS matching for a sales order where Accounting rule used
is: 3 Months, Deferred

HISTORY

Author : Marius Garip

Create Date 04-Aug-2009
Update Date 04-Aug-2009

DETAILS

The following scenario illustrate a short example of a Revenue / COGS matching for a sales order where Accounting rule used
is: 3 Months, Deferred

Please review attached file COGS1-Example

1.Define new Item

Navigate to : Inventory>Item Master>Define item MM-ITEM65 (Purchase Item)
Assign to Organization M3

2. Do a Miscellaneous Receipt in Organization M3.

Navigate to : Navigation: Miscellaneous Transactions>Receive MM-ITEM65 in Subinventory Store.
Qty 100@15USD

3. Check Item cost :

Navigate to : Costs>Item Costs>Enter Item MM-ITEM65 : Unit cost =15 USD

4. Define Accounting Rules in Account Receivables

Navigate to : Account Receivables>Setup>Transactions>Accounting Rules

There are two Predefined Accounting rules
a-3 Months , Deferred
b-Immediately

5.Navigate to : Sales Order screen > Enter a SO

Order Type =Mixed,
Customer=A.C Networks
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Ordered item MM-ITEM65/qty=5/ price=15/ Accounting rule=3 Months, Deferred,
Date Ordered: 04-AUG-2009 ,
Total Value =75
Shipping warehouse=M3
(eg 63849)

6. Book the SO: SO 63849 booked

7. Navigate to: Order Management >Shipping>Transactions >Enter SO

a. Pick Release the SO
b.Ship Confirm the SO

Item is shipped
Line is closed

8. Review the Material Transactions form

9. Distribution of the SO issue

When a Sales order is shipped the following accounting takes place:

Inventory Valuation Account: Credit.

Deferred COGS account: Debit

10. Run the Workflow Background Process request

11. Create the Invoice with the Autoinvoice request

Navigate to : Sales Order Accounts Receivables>Interfaces>Autoinvoice

12.Check the Invoice in AR

Navigate to : Accounts Receivables>Control>Revenue Accounting>Enter reference number: SO (ie.63849)

13. Invoice generated:

Invoice= 10033708

14. Recognize the revenue in AR >

Navigate to : Accounts Receivables>Control>Run Revenue Recognition request

15. After recognizing the revenue. We need to accept it.

Navigate to : Accounts Receivables>Control>Revenue Accounting>Enter reference number: SO (ie.63849)Manage
Revenue>Schedule Revenue

16. Now the revenue has been recognized according to our accounting rule: 3 Months, Deferred
GL Date Amount
50% August 37.5
25%September 18.8
25%October 18.7

For August: 50% of the revenue has been recognized

17. Now we run a set of concurrent processes to record sales order and revenue recognition transactions and to create and
cost COGS recognition transactions. These COGS recognition transactions adjust deferred and earned COGS in an amount that
synchronizes the % of earned COGS to earned revenue on sales order shipment lines.

18. Record Order Management Transactions: records new sales order transaction activity such as shipments and RMA returns
in Oracle Order Management.

19. Collect Revenue Recognition Information: determines the percentage of recognized or earned revenue related to invoiced
sales order shipment lines in Oracle Receivables.

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20. Generate COGS Recognition Events: creates and costs COGS recognition events for new sales order shipments/returns and
changes in revenue recognition and credits for invoiced sales order shipment lines.

21. A non-physical transaction has been generated Transaction Type= COGS Recognition

The distribution for the COGS Recognition transaction associated with the Sales Order transaction now would be as follows:

Deferred COGS : Debit revenue percentage

COGS : Credit (Actual revenue percentage )

Thus, essentially the recognized COGS balance is to move the value from Deferred COGS to COGS.

This particular COGS recognition transaction actually corresponds to a revenue recognition percentage change.

Note:

Make sure you are on the latest file version CSTRCMVB.pls 120.45.12010000.92 Patch 20770685:R12.BOM.C or
higher

For additional information, please review the following Notes:

DCOGS AND COGS RECOGNITION ACCOUNTING USEFUL TIPS Note 1060202.1

R12 : Deferred COGS account Note 416678.1

COGS Dataflow and Diagnostics Note 1307906.1

COGS / Deferred COGS common problems Note 1314335.1

SUMMARY

COGS/ Deferred COGS common problems

REFERENCES

NOTE:1307906.1 - COGS Dataflow and Diagnostics [Video]

NOTE:416678.1 - R12 : Deferred COGS (DCOGS) Accounting
NOTE:738529.1 - Create Accounting Unprocessed Events On The Subledger Period Close Exception Report
NOTE:1060202.1 - COGS and DCOGS Recognition Accounting Useful Tips
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