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Business Process:In R11i When a Sales order is shipped and interface trip stop is completed. This make a

call to COGS workflow to generate the COGS account. This then generate following

accounting.Cr Inventory Valuation account $250

Dr COGS Account $250In R12 when a sales order is shipped and interface trip stop is completed the following

accounting entries gets generated.

Cr Inventory Valuation account $250Dr Deferred COGS Account $250

After the AR invoice is generated and the revenue is recognised (Considering you dont

have revenue recognition policies or specific accounting rules), following program will

create COGS recognition transaction. This will reflect a change in the revenue

recognition percentage for a sales order line.1. Collect Revenue Recognition Information program: This program will collect

the change in revenue recognition percentage based on AR events within the user

specified date range. It collects invoice information of the sale order line from

RA_CUST_TRX_LINES_ALL and RA_CUST_TRX_LINE_GL_DIST_ALL after the

revenue is recognized and check the percentage revenue recognized. It then insert

information in CST_REVENUE_RECOGNITION_LINE.Navigation: Cost > COGS Recognition > Collect Revenue Recognition Information

2. Generate COGS Recognition Events: This program will create the COGSrecognition transaction for each sales order line where there is a mismatch between the

latest revenue recognition percentage and the current COGS recognition percentage.

This is the program which also makes the transactions costed by creating these

accounting entries. So cost manager is not used to make these transactions as costed in

R12.The COGS account in this entry is taken from the distribution_account in

mtl_material_transactions table (which was generated earlier by COGS workflow).

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Cr Deferred account $250 (Actual Revenue %)

Dr COGS Account $250 (Actual Revenue %)Navigation: Cost > COGS Recognition > Generate COGS Recognition EventsThis particular COGS recognition transaction actually correspond to a revenue

recognition percentage change.

As we have seen above this new feature does help in resolving some of the key

accounting issues but we need to be aware of the following also1. With this feature the COGS recognition now requires few extra concurrent

requests to be submitted.

2. AR revenue need to be recognized to have COGS recognized3. This functionality is not optional as it is mandatory to be used in R124. To make the complete set of transactions visible in the Material Transaction

screen, Include Logical Transaction checkbox need to be checked.This concludes our discussion about Deferred COGS. Now I am planning to pick some

topic from procurement as we have not touched that area till date.