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Deferred COGS: How To Use This Feature of Oracle Apps R12: Appsfromrajiv

The document discusses the deferred COGS feature introduced in Oracle Apps Release 12. Deferred COGS allows COGS to be recognized only when revenue is recognized for a sales order line, ensuring costs and revenues are matched in the same period. When an order is shipped, the inventory cost is credited to a deferred COGS account instead of the COGS account. After revenue is recognized through invoicing, programs generate COGS recognition transactions to credit the deferred account and debit the actual COGS account based on the revenue recognition percentage. This resolves issues of revenues and costs being recognized in different periods.

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Thivan
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54 views

Deferred COGS: How To Use This Feature of Oracle Apps R12: Appsfromrajiv

The document discusses the deferred COGS feature introduced in Oracle Apps Release 12. Deferred COGS allows COGS to be recognized only when revenue is recognized for a sales order line, ensuring costs and revenues are matched in the same period. When an order is shipped, the inventory cost is credited to a deferred COGS account instead of the COGS account. After revenue is recognized through invoicing, programs generate COGS recognition transactions to credit the deferred account and debit the actual COGS account based on the revenue recognition percentage. This resolves issues of revenues and costs being recognized in different periods.

Uploaded by

Thivan
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 5

10/27/2016

DeferredCOGS:HowtousethisfeatureofOracleAppsR12|appsfromrajiv

appsfromrajiv
AllaboutOracleApplication

DeferredCOGS:HowtousethisfeatureofOracleAppsR12
PostedonJune22,2011

13Votes

Finallyareliefforalltheaccountinguserswhohadproblemsworkingwithoracleappsduetoperiodmismatchof
revenueandcostrecognition.Generallytheorderswhichareshippedonthelastdayofmonthhavethisissue.As
mostofyouknowthattillrelease11i,thevalueofgoodshippedisexpensedtoCOGSwhenthematerialinship
confirmedinshippingandrevenuewillgetrecognizedaftertheinvoicesaregeneratedinARandrevenue
recognitionisdone.TheproblemthataccountantsfacewiththisdesignisthatonthelastdayofmonthCOGSgets
recognizedwhenweshipconfirmthematerialbutinvoicegetsgeneratedinnextmonthandsorevenuegets
recognizedindifferentmonth.Thisdoesnotlookgoodfromthematchingprinciplewhichrequirestherevenue
andcostshouldgetrecognizedinthesameperiod.
ThedeferredCOGSaccountisthenewfeatureintroducedinRelease12.Thekeyfundamentalbehindthefeature
isthattheCOGSisnowdirectlymatchedtotheRevenue.Insimpleterms,thismeans,COGSforanorderlinewill
berecognizedonlyiftherevenueisrecognizedforthatlinemakingsurethattherevenueandCOGSarepostedin
thesamemonth.Matchingpercentageisalsotakencarewhichensuresthatrevenueandcostarealwaysinsync.
Setup:OnlyonekeysetupinvolvedforthisfunctionalityistodefinetheDeferCOGSaccount.
Navigation:InventorySetupOrganizationParametersOtherAccounts
BusinessProcess:
InR11iWhenaSalesorderisshippedandinterfacetripstopiscompleted.ThismakeacalltoCOGSworkflowto
generatetheCOGSaccount.Thisthengeneratefollowingaccounting.
CrInventoryValuationaccount$250
DrCOGSAccount$250
InR12whenasalesorderisshippedandinterfacetripstopiscompletedthefollowingaccountingentriesgets
generated.
CrInventoryValuationaccount$250
DrDeferredCOGSAccount$250
AftertheARinvoiceisgeneratedandtherevenueisrecognised(Consideringyoudonthaverevenuerecognition
policiesorspecificaccountingrules),followingprogramwillcreateCOGSrecognitiontransaction.Thiswillreflect
achangeintherevenuerecognitionpercentageforasalesorderline.
1.CollectRevenueRecognitionInformationprogram:Thisprogramwillcollectthechangeinrevenue
recognitionpercentagebasedonAReventswithintheuserspecifieddaterange.Itcollectsinvoiceinformationof
thesaleorderlinefromRA_CUST_TRX_LINES_ALLandRA_CUST_TRX_LINE_GL_DIST_ALLafterthe
revenueisrecognizedandcheckthepercentagerevenuerecognized.Ittheninsertinformationin
CST_REVENUE_RECOGNITION_LINE.

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10/27/2016

DeferredCOGS:HowtousethisfeatureofOracleAppsR12|appsfromrajiv

Navigation:Cost>COGSRecognition>CollectRevenueRecognitionInformation
2.GenerateCOGSRecognitionEvents:ThisprogramwillcreatetheCOGSrecognitiontransactionforeach
salesorderlinewherethereisamismatchbetweenthelatestrevenuerecognitionpercentageandthecurrent
COGSrecognitionpercentage.Thisistheprogramwhichalsomakesthetransactionscostedbycreatingthese
accountingentries.SocostmanagerisnotusedtomakethesetransactionsascostedinR12.TheCOGSaccountin
thisentryistakenfromthedistribution_accountinmtl_material_transactionstable(whichwasgeneratedearlier
byCOGSworkflow).
CrDeferredaccount$250(ActualRevenue%)
DrCOGSAccount$250(ActualRevenue%)
Navigation:Cost>COGSRecognition>GenerateCOGSRecognitionEvents
ThisparticularCOGSrecognitiontransactionactuallycorrespondtoarevenuerecognitionpercentagechange.
Aswehaveseenabovethisnewfeaturedoeshelpinresolvingsomeofthekeyaccountingissuesbutweneedtobe
awareofthefollowingalso
1.WiththisfeaturetheCOGSrecognitionnowrequiresfewextraconcurrentrequeststobesubmitted.
2.ARrevenueneedtoberecognizedtohaveCOGSrecognized
3.ThisfunctionalityisnotoptionalasitismandatorytobeusedinR12
4.TomakethecompletesetoftransactionsvisibleintheMaterialTransactionscreen,IncludeLogical
Transactioncheckboxneedtobechecked.
ThisconcludesourdiscussionaboutDeferredCOGS.NowIamplanningtopicksometopicfromprocurementas
wehavenottouchedthatareatilldate.
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DeferredCOGS:HowtousethisfeatureofOracleAppsR12|appsfromrajiv
AboutAPPSFROMRAJIV
OracleApplicationConsultantandProjectmanager.Theviewsexpressedonthisblogaremyownanddonotreflecttheposition
ofOracleoranyothercorporation.
ViewallpostsbyAPPSFROMRAJIV

ThisentrywaspostedinOracleApplication,OracleOrderManagementandtaggedCOGSinR12,CostofGoodsSoldinOracleR12,DeferredCOGSfunctionalityofR12,
DeferredCOGSinOracleApplication,DeferredCOGSinR12,DeferredCostofGoodsSold,R12NewFeatures,RevenueandCOGSmatching.Bookmarkthepermalink.

15ResponsestoDeferredCOGS:HowtousethisfeatureofOracleAppsR12
Sudhakarsays:
February23,2012at9:13am

Itisverygoodarticle..explainedveryverynicemanner,,ThankstoRajiv
Reply

Narendrasays:
May28,2012at11:15am

Hirajivitsveryusefultome..
Reply

jharnasays:
July13,2012at9:00am

HiRajiv,
Itistrulyaveryhelpfularticle..
Thanks
Reply

Charansays:
October2,2012at4:42pm

Veryusefularticle.Appreciateyourefforts!
Reply

Sivasays:
January16,2013at5:08am

VeryGood..CrispandClearforastarterlikeme.
Reply

xxxxxxxsays:
January31,2013at12:51am

Veryclearlydocumented
Reply

Lakshmisays:
June12,2013at2:40pm

Abletounderstanditfastwithyourexplanation
https://appsfromrajiv.wordpress.com/2011/06/22/deferredcogshowtousethisfeatureoforacleappsr12/

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10/27/2016

DeferredCOGS:HowtousethisfeatureofOracleAppsR12|appsfromrajiv
Reply

Saikatsays:
September10,2013at12:30pm

Excellentaricle,veryuseful.Thanksforyourefforts.
Reply

Govindsays:
November11,2014at2:00am

NiceArticle
Reply

sihungismesays:
April16,2015at4:02am

thanksRajiv,reallyhelpme
Reply

Pradeepsays:
June3,2015at7:13pm

VeryNiceeasyandsimplewaytopresent!!
Reply

Dhirensays:
February10,2016at7:22am

Goodinformation.Veryhelpful.Onequestiononthesame.HowcanthisbehandledinProjectsmodulefortimecards,
expensesandsupplierinvoicesinterfacedfromothersources.?
Reply

APPSFROMRAJIVsays:
May18,2016at6:31am

HiDhiren,Awayfromproductfromalongtime..Notabletohelpmuch..
Reply

manishsays:
May13,2016at2:38pm

Nicearticle.
Reply

APPSFROMRAJIVsays:
May18,2016at6:29am

ThanksManish!!
Reply

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