Information about the revenue recognition calculation for service fees in Project Accounting

This article discusses information about service fees in Project Accounting in Microsoft Dynamics GP. This article also discusses how the revenue recognition amount is calculated.

Applies to:   Microsoft Dynamics GP
Original KB number:   885070

A service fee can be set up for any time period that you specify. The percent complete is based on the total number of days for the service fee. The Begin Date field and the End Date field are used to calculate the number of days for the service fee.

Then, the percent complete is multiplied by the fee amount to obtain the revenue recognition amount. Billing has no affect on the amount that is recognized.

The following examples show how the revenue recognition amount is calculated:

• Service fee example 1

  Fee Amount: $10,000
  Begin Date: 1/1/2007
  End Date: 4/30/2007
  Total Number of Days = 121 days (31 + 29 + 31 + 30)

  If revenue recognition is run with a cutoff date of 2/15/2007, the percent complete is calculated as follows:

  Percent Complete = ((31 + 15) - 1) / (121 - 1) = 0.375 = 37.50%
  Amount Recognized = 37.50% * $10,000 = $3750

• Service fee example 2

  Fee Amount: $1000
  Begin Date: 1/1/2006
  End Date: 2/29/2007
  Total Number of Days = 425 days (365 + 31 + 29)

  If revenue recognition is run with a cutoff date of 2/15/2007, the percent complete is calculated as follows:

  Percent Complete = ((365 + 31 + 15) - 1) / (425 - 1) = 0.9669811 = 96.70%
  Amount Recognized = 96.70% * $1000 = $967