Results Analysis

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Results Analysisand

International Accounting Standard (IAS)

Contents:Introduction ...................................................................................................................................................2

Valuation Based On Different Accounting Principles ........................................................................................... 2Cost-Based POC Method ..............................................................................................................................3

Posting Example...................................................................................................................................................... 4Postings in Financial Accounting ................................................................................................................... 4Report in Controlling Similar to COS Accounting ............................................................................................. 5Report in Controlling Similar to Period Accounting .......................................................................................... 5Order Report in Controlling ................................................................................................................................. 7

Planned Costs .......................................................................................................................................................... 7Offset of Customer Down Payments with Work in Process .......................................................................9

Posting Example...................................................................................................................................................... 9Reserves for Imminent Loss ...................................................................................................................... 11

Posting Example.................................................................................................................................................... 12Offset of Reserves for Imminent Loss with Work in Process ................................................................... 14

Posting Example.................................................................................................................................................... 14POC Method Based On Other Percentages of Completion ...................................................................... 17

Quantity-Based POC Method ............................................................................................................................... 17POC Method Based On Project Progress ........................................................................................................... 17POC Method Based On Billing Plan or Periodic Planned Revenue ................................................................. 18Revenue-Based POC Method .............................................................................................................................. 18

Applying the Percentage of Completion of an Object to Subordinate Objects....................................... 19Completed Contract Method ...................................................................................................................... 19Apportionment/Account Assignment of Revenue in Excess of Billings ................................................. 19

Trading Partner Number and Other Characteristics ........................................................................................... 20Parallel Ledger Solution ............................................................................................................................. 20Runtime Considerations with Multiple Valuations.................................................................................... 20Activity Received But No Invoice ............................................................................................................... 21Resource-Related Billing/Fixed Price ........................................................................................................ 21Shipping Items of a Sales Order for Make-to-Order Production .............................................................. 21Valuated Project Stock ............................................................................................................................... 21Excluding Certain Overhead Costs ............................................................................................................ 22Differentiation Against SD Revenue Recognition and the Accrual Engine ............................................. 22Valuation Based On German GAAP (HGB) ................................................................................................ 22

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IntroductionResults analysis was developed for companies with long-term orders. We regard orders as long-term if ittakes more than approximately one year to complete them. For Controlling requirements or for balance sheetpurposes, such objects need to be valuated at regular intervals. With large quantities of objects, for mid-yearstatements, or for the requirements of Controlling, however, results analysis for objects with shorter life cyclesmay be customary or even required.

The following text discusses the possibilities of using results analysis for valuation based on IAS.

Valuation Based On Different Accounting PrinciplesIn principle, results analysis supports all common accounting principles such as HGB, IAS, and US GAAP.Many requirements are supported directly by methods in Customizing, while others can usually be realizedthrough customer enhancements in results analysis. It should be kept in mind that R/3 Controlling can only bebased on one accounting principle and that results analysis uses the Controlling data for valuation. Thisresults in limitations for results analysis with respect to parallel valuation based on multiple accountingprinciples, which can be compensated for to some extent by customer enhancements.

It is possible to use more than one valuation procedure in parallel. Usually not more than two valuationprocedures are needed, such as one for local valuation and one for valuation based on IAS. The simplestsolution is to represent this with two results analysis versions. Note that only results analysis version 0 can beused in Profitability Analysis, while it is possible to post the inventories and reserves of all results analysisversions to Financial Accounting. In Financial Accounting, the posted inventories and reserves for eachvaluation procedure are represented by a particular set of accounts. This reflects the SAP recommendation torepresent valuation based on multiple accounting principles through accounts. It is also possible to have thepostings for a second valuation procedure consist of just the differences against the first basic valuationprocedure. Release 4.7 also includes the option of linking the posting rules to an accounting principle (seeParallel Ledger Solution).

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Cost-Based POC MethodA typical IAS method is the determination of the percentage of completion (POC) based on costs:

POC = Cumulative Actual Costs / Planned Costs of Valuation

This results in

Costs Affecting Net Income = POC * Planned Costs of Valuation / Cumulative Actual CostsRevenue Affecting Net Income = POC * Planned Revenue of Valuation

The expression Costs Affecting Net Income can be understood as the cost of sales in a general sense.Another term for the expression Revenue Affecting Net Income is recognized revenue. The costs andrevenues affecting net income and any reserves for imminent loss are settled to the profit.

In this case a revenue in excess of billings or a revenue surplus would be posted to Financial Accounting. Thevalues are calculated as follows:

If Revenue Affecting Net Income > Cumulative Actual Revenue, thenRevenue in Excess of Billings = Revenue Affecting Net Income - Cumulative Actual

Revenue,Revenue Surplus = 0.

If Revenue Affecting Net Income < Cumulative Actual Revenue, thenRevenue in Excess of Billings = 0Revenue Surplus = Cumulative Actual Revenue - Revenue Affecting Net Income

Revenue in Excess of Billings is also called Work in Process, POC Revenue, Recognized Revenue in Excessof Billed Revenue, or Unbilled Revenue. Revenue Surplus is also called Revenue Reserve, Billed Revenue inExcess of Recognized Revenue, or Deferred Revenue.

In the present solution the revenue in excess of billings and the revenue surplus are posted to G/L accountsrather than to customer accounts.

The cost-based POC method is represented by results analysis method 03 or results analysis type E withprofit indicator Q.

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Posting ExampleA product is manufactured for a customer in a make-to-order environment. The planned cost is 8,000 EURand the planned revenue is 9,000 EUR. There is to be no variance in the actuals against plan. Resultsanalysis and the calculated clearing postings are each run at the end of the month. These clearing entries areposted to the accounts highlighted in brown. A highly simplified model with the accounts Cash on HandAllocated Overhead and Production Costs is used to represent the output hours.

Postings in Financial Accounting

Balance Sheet P&L

Asset Side Liabilities Side Cost Side Revenue Side

MaterialComponents

Dr Cr(1) 3,000(5) 0,500

Cash AllocatedOverhead

Dr Cr(1) 4,000(5) 0,500

Revenue in Excess ofBillings

Dr Cr(2) 7,865 (4) 7,865

ReceivableDr Cr(3) 9,000

Revenue SurplusDr Cr(6) 1,135 (4) 1,135

ProductionCosts

Dr Cr(1) 3,000(1) 4,000(5) 0,500(5) 0,500

Reserve ChangeDr Cr(4) 1,135 (6) 1,135

RevenueDr Cr

(3) 9,000

InventoryChange

Dr Cr(4) 7,865 (2) 7,865

1. January 2004: Material components and labor to Expenses

2. 1/31/2004: Post Recognized Revenue in Excess of Billed Revenue (9000 * 7000 / 8000 = 7865)

3. February 2004: Invoicing, no expense

4. 2/28/2004: Clear Recognized Revenue in Excess of Billed Revenue, post Revenue Surplus (BilledRevenue in Excess of Recognized Revenue) (9000 - 7865 = 1135)

5. March 2004: Material components and labor for follow-up costs to Expenses

6. 3/31/2004: Clear Revenue Surplus

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The appropriate posting rules are:

… Category Balance/Creation/ Con-sump-tion

CostElement

Re-cordSeq.No.

P&L Account Balance SheetAccount

… POCB 0 Inventory ChangeAccount

Revenue in Excessof Billings Account

… POCU 0 Reserves ChangeAccount

Revenue SurplusAccount

Report in Controlling Similar to COS Accounting

1. January 2004: Materialcomponents and laborto Expenses

2. March 2004: Materialcomponents and laborfor follow-up costs toExpenses

Report in ControllingSimilar to Period Accounting


2. 1/31/2004: Post Workin Process

3. February 2004: Billing

4. 2/28/2004: Clear Workin Process, postReserves forUnrealized Costs


6. 3/31/2004: Usage ofreserve

COS Accounting Report

January February March Total

Revenue (affecting netincome) 7865 1135 9000

Cost (of sales) - 7000 1000 8000

Result = 865 135 1000

Period Accounting Report


Revenue 9000 9000

Inventory change + 7865 -7865 0

Costs - 40003000

500500 8000

Reserve change - 1135 -1135 0

Result = 867 0 135 1000

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Order Report in Controlling


2. February 2004: Billing


Planned Costs

The determination of plannedcosts is of central significance to the cost-based POC method. There are the following options:

Store the planned costs for valuation with orders and projects on a special version. Update the planned costs, which tends to be more suitable for long-term objects. Compare the planned values (as part of results analysis) against the actuals and if necessary

automatically adjust the planned values of the valuation. This is represented with the parametersvaluation basis and overrun, as well as with customer enhancement 2 of results analysis. As a rule, thismeans that in the case that the cumulative actual costs exceed the planned costs, the planned costs ofvaluation are replaced by the cumulative actual costs.

Valuate the planned values in the Project System based on Updated Costs. The updated costs consistof actual costs and expected costs. This is represented with the valuation basis U and V.

The planned values of valuation can be composed of the actual costs of the WBS elements with thestatus technically completed and the planned values of the WBS elements that do not have the statustechnically completed. This is represented with project structure C.

Update the planned costs of valuation by results analysis, which documents the changes in plan thataffect results analysis. Updating the plan values should be switched off in the results analysis version(Note 457469).

Assign plan-actual variances to special line IDs. This is represented with the overrun parameter. With the results reserve it is possible to reduce the plan result of valuation as a lump sum.

Order Report

PlanActual


-9000Revenue

-9000 -9000

8000Production Costs 3000

4000500500 8000

-1000Total

7000 -9000 1000 -1000

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The Write Plan Valuesindicator is in theExtended Control ofthe results analysisversion.

The arrowsindicate wherethe parametersmentioned areto be found inthe valuationmethod.

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Offset of Customer Down Payments with Work in Process

Customer down payments can be added to the work in process (such as the revenue in excess of billings) oroffset with separate accounts (Note 448150). This is controlled with the Commitment parameter in thevaluation method.

Posting Example

A product is manufactured for a customer in a make-to-order environment. The planned cost is 8,000 EURand the planned revenue is 9,000 EUR. There is to be no variance in the actuals against plan. Resultsanalysis and the calculated clearing postings are each run at the end of the month. These clearing entries areposted to the accounts highlighted in brown and asterisked. A highly simplified model with the accounts Cashon Hand Allocated Overhead and Production Costs is used to represent the output hours.

The appropriate posting rules for this example are:


CostElement

Re-cordSeq.No.






ANKB 0 Down PaymentClearing Account

Reduction ofRevenue in Excessof Billings Account

ANUS 0 Down PaymentClearing Account

Surplus from DownPayment Account

The account entered in the P&L account column does not have to be a P&L account. The headings areappropriate for the simple inventory and reserve postings. The lines for the categories ANKB and ANUS arepostings between balance sheet accounts.

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Balance Sheet P&L


MaterialComponents

Dr Cr(01) 3,000(13) 0,500


Dr Cr(01) 4,000(13) 0,500

Cash Payment, DownPayment

Dr Cr(03) 4,000(05) 4,000(07) 0,900(09) 0,100

ReceivableDr Cr(07) 8,900 (07) 8,900(11) 0,100 (11) 0,100

Revenue in Excess ofBillings*)

Dr Cr(02) 7,865 - (08) 7,865

Reduction of Revenue inExcess of Billings*)

Dr Cr(08) 7,865 (04) 4,000

(06) 3,865

Down PaymentDr Cr(07) 8,000 (03) 4,000(11) 0,100 (05) 4,000

(09) 0,100

Revenue Surplus*)Dr Cr(14) 1,135 (08) 1,035

(12) 0,100

Down PaymentClearing*)

Dr Cr(04) 4,000 (08) 8,000(06) 4,000 (12) 0,100(10) 0,100

Surplus from DownPayment*)

Dr Cr(08) 135 (06) 135(12) 100 (10) 100

ProductionCosts

Dr Cr(01) 3,000(01) 4,000(13) 0,500(13) 0,500

ReserveChange*)

Dr Cr(08)1,035

(14)1,135

(12)0,100

RevenueDr Cr

(07) 8,900(11) 0,100

InventoryChange*)

Dr Cr(08)7,865

(02)7,865

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The numbers in parentheses, which are included in the postings to the accounts, correspond to the numberingin the following list.

1. January 2004: Material components and labor to Expenses

2. 1/31/2004: Post Recognized Revenue (Unbilled Receivable, Recognized Revenue in Excess of BilledRevenue) (Actual Costs / Planned Costs * Planned Revenue = 7000 / 8000 * 9000 = 7865)

3. February 2004: Down payment

4. 2/28/2004: Reduce Revenue in Excess of Billings, clear down payment

5. March 2004: Down payment

6. 3/31/2004: Reduce inventory, surplus from down payment

7. April 2004: Billing and payment

8. 4/30/2004: Clear Revenue in Excess of Billings and Surplus from Down Payment, post RevenueSurplus (Billed Revenue in Excess of Recognized Revenue) (8900 - 7865 = 1035)

9. May 2004: Down payment

10. May 31, 2004: Surplus from down payment

11. June 2004: Billing and payment

12. 6/30/2004: Post revenue surplus, clear surplus from down payment

13. July 2004: Material components and labor for follow-up costs to Expenses

14. 7/31/2004: Clear Revenue Surplus

Reserves for Imminent Loss

Results analysis calculates a reserve for imminent loss with the following formula:

TheCommitmentsparameter inthe valuationmethod

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If Planned Cost of Valuation > Planned Revenue of Valuation:Planned Loss = Planned Cost of Valuation – Planned Revenue of ValuationRealized Loss = POC * Planned LossReserve for Imminent Loss = Planned Loss – Realized Loss


Balance Sheet P&L


MaterialComponents

Dr Cr

(3) 3,000(7) 0,500


Dr Cr

(3) 4,000(7) 0,500


Dr Cr

(4) 6,125 (6) 6,125

ReceivableDr Cr

(5) 7,000

Revenue SurplusDr Cr

(8) 0,875 (6) 0,875

Reserves forImminent Loss

Dr Cr

(4) 0,875 (2) 1,000(8) 0,125

ProductionCosts

Dr Cr

(3) 3,000(3) 4,000(7) 0,500(7) 0,500

Reserve ChangeDr Cr

(6) 0,875 (8) 0,875

Reserves for ImminentLoss Change

Dr Cr

(2 ) 1,000 (4) 0,875(8) 0,125

RevenueDr Cr

(5) 7,000

InventoryChange

Dr Cr

(6)6,125

(4)6,125

1. January 2004: Objected created and costed

2. 1/31/2004: Post Reserve for Imminent Loss (8000 - 7000 = 1000)

3. February 2004: Material components and labor to Expenses

4. 2/28/2004: Post Revenue in Excess of Billings (7000 * 7000 / 8000 = 6125) and realize loss (1000 *7000 / 8000 = 875)

5. March 2004: Invoicing, no expense

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6. 3/31/2004: Clear Revenue in Excess of Billings, post Revenue Surplus (7000 - 6125 = 875)

7. April 2004: Material components and labor for follow-up costs to Expenses

8. 4/30/2004: Clear revenue surplus and realize loss

The appropriate posting rules are:


CostElement

Re-cordSeq.No.






POCV 0 Reserves for ImminentLoss Change Account

Reserves forImminent LossAccount

POCR 0 Reserves for ImminentLoss Change Account


With some methods, results analysis category RDVL is used instead of POCV and POCR (see Note 602707).

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Offset of Reserves for Imminent Loss with Work in Process

Reserves for imminent loss can be added to the work in process (such as the revenue in excess of billings) oroffset with separate accounts (Notes 550573, 562609, 563795). This is controlled with the Method ofApportionment Reserves for Imminent Loss parameter in the valuation method. For revenue in excess ofbillings, for example, the method of apportionment is E (Note 562609).


The appropriate posting rules for this example are:


CostElement

Re-cordSeq.No.






POCV 0 Reserves for ImminentLoss Change Account


POCR 0 Reserves for ImminentLoss Change Account


RDVA 0 Reserves for ImminentLoss Change Account

Reduction ofRevenue in Excess

The parameterMethod ofApportionmentReserves forImminent Lossin thevaluationmethod

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of Billings Account

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Balance Sheet P&L


MaterialComponents

Dr Cr(3) 3,000(7) 0,500


Dr Cr(3) 4,000(7) 0,500


Dr Cr(4) 6,125 (6) 6,125

Reduction of Revenue inExcess of Billings

Dr Cr(6a) 0,125 (4a) 0,125

ReceivableDr Cr(5) 7,000

Revenue SurplusDr Cr(8) 0,875 (6) 0,875

Reserves forImminent Loss

Dr Cr(4) 0,875 (2) 1,000(4a) 0,125 (6a) 0,125(8) 0,125

ProductionCosts

Dr Cr(3) 3,000(3) 4,000(7) 0,500(7) 0,500

Reserve ChangeDr Cr(6) 0,875 (8) 0,875

Reserves for ImminentLoss Change

Dr Cr(2 ) 1,000 (4) 0,875

(8) 0,125

RevenueDr Cr

(5) 7,000

InventoryChange

Dr Cr(6)6,125

(4)6,125

1. January 2004: Objected created and costed

2. 1/31/2004: Post Reserve for Imminent Loss (8000 - 7000 = 1000)

3. February 2004: Material components and labor to Expenses

4. 2/28/2004: Post Revenue in Excess of Billings (7000 * 7000 / 8000 = 6125) and realize loss (1000 *7000 / 8000 = 875) and [4a] offset the remaining Reserve for Imminent Loss of 125 with the Revenuein Excess of Billings

5. March 2004: Invoicing, no expense

6. 3/31/2004: Clear Revenue in Excess of Billings, post Revenue Surplus (7000 - 6125 = 875) and [6a]clear the offset of the Reserve for Imminent Loss with the Revenue in Excess of Billings

7. April 2004: Material components and labor for follow-up costs to Expenses

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8. 4/30/2004: Clear revenue surplus and realize loss

POC Method Based On Other Percentages of Completion

There are other approaches besides the percentage of completion (POC) based on costs.

In all of the following methods, as with the special case of the cost-based POC method, you determine thecosts and revenues affecting net income as follows:

Costs Affecting Net Income = POC * Planned Costs of ValuationRevenue Affecting Net Income = POC * Planned Revenue of Valuation

As a rule,

Costs Affecting Net Income Cumulative Actual CostsRevenues Affecting Net Income Cumulative Actual Revenues

For this reason there will be work in process and reserves both on the revenue side and on the cost side:

If Revenue Affecting Net Income > Cumulative Actual Revenue, thenRevenue in Excess of Billings = Revenue Affecting Net Income - Cumulative Actual

Revenue,Revenue Surplus = 0.

If Revenue Affecting Net Income < Cumulative Actual Revenue, thenRevenue in Excess of Billings = 0Revenue Surplus = Cumulative Actual Revenue - Revenue Affecting Net Income

If Costs Affecting Net Income < Cumulative Actual Costs, thenCapitalized Costs = Cumulative Actual Costs – Costs Affecting Net IncomeReserves for Unrealized Costs = 0

If Costs Affecting Net Income > Cumulative Actual Costs, thenCapitalized Costs = 0Reserves for Unrealized Costs = Costs Affecting Net Income – Capitalized Costs

Work in process is another term for capitalized costs. The costs affecting net income can also be called thecost of sales in a general sense.

Quantity-Based POC MethodThe quantity-based POC method calculates the percentage of completion as follows:

POC = Cumulative Actual Quantity / Planned Quantity

With sales orders, the quantities can be the delivery quantity or the invoiced quantity (quantity base A and B).

It is possible to use the statistical key figure ABGMNG with all objects (quantity base C). The planned quantityof statistical key figure ABGMNG must be maintained with the standard planning transaction or can be set incustomer enhancement 2 of results analysis (for example at a constant 100). The actual quantity of statisticalkey figure ABGMNG can be maintained with transactions KKG1, KKG2, and KKG3 of results analysis or canbe derived in customer enhancement 2 of results analysis.

The quantity-based POC method is represented by results analysis method 05 or results analysis type M withprofit indicator Q.

POC Method Based On Project ProgressProjects have a separate, complex method of determining the progress. The project progress value can beused by results analysis.

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The POC method based on the project progress value is represented by results analysis method 07 or resultsanalysis type L with profit indicator Q.

POC Method Based On Billing Plan or Periodic Planned RevenueThe sales order can use the billing plan to derive the percentage of completion. Results analysis apportionsthe planned revenues for the intervals of the billing plan to the periods between them.

All objects can use the periodic planned revenue to derive the percentage of completion.

The POC is calculated as follows:

POC = Cumulative Planned Revenue / Planned Revenue

The POC method based on the billing plan is represented by results analysis type E, profit indicator R, andprofit basis G or H.

The POC method based on the periodic planned revenue is represented by results analysis method 06 orresults analysis type E with profit indicator R.

Revenue-Based POC MethodThe revenue-based POC method calculates the percentage of completion as follows:

POC = Cumulative Actual Revenue / Planned Revenue

The following applies in this special case:

Revenue Affecting Net Income = POC * Planned Revenue of Valuation = Cumulative ActualRevenue

The revenue-based POC method is represented by results analysis method 01 (results analysis type E, profitindicator M).

The parametersResults AnalysisType andProfit Indicator

and Profit Basis(mentioned withthe POC basedon periodicplannedrevenue)

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Applying the Percentage of Completion of an Object to Subordinate Objects

Projects and sales orders have a structure. Results analysis runs on only some of the objects in the structureand summarizes the values of the remaining objects to the objects for which results analysis is being run.Sometimes it is desirable to apply the percentage of completion of the entire object to subordinate objects.

You can use the parameter POC_OBJEKTNUMMER (Note 682426) of customer enhancement 2 of resultsanalysis to specify the object number of the object that carries the percentage of completion of the entireobject. This is possible for the quantity-based POC method and the POC method based on the projectprogress.

There is no defined solution for the cost-based POC method. In principle, it would be possible to represent thepercentage of completion of the entire object with the statistical key figure ABGMNG (profit basis C) for thequantity-based POC method. The percentage of completion of the entire object could be calculated in aseparate run, in a separate results analysis version, before results analysis of the subordinate objects, or thecalculation of the POC could be integrated into results analysis of the subordinate objects using the customerenhancements. If the company code currency is not the same as the controlling area currency, there will be apercentage of completion for each currency; the quantity of a second statistical key figure can be evaluatedwith customer enhancement 2.

Completed Contract Method

With the Completed Contract Method, the costs and revenues affecting the net income are calculated asfollows:

The object does not have the status XCosts affecting net income = 0Revenue affecting net income = 0

and thereforeCapitalized Costs = Cumulative Actual CostsRevenue Surplus = Cumulative Actual Revenues

The object has the status XCosts Affecting Net Income = Cumulative Actual CostsRevenue Affecting Net Income = Cumulative Actual Revenue

andCapitalized Costs = 0Revenue Surplus = 0

Status X is usually the status Final Billing or Technically Completed. However, it can be any other status.

The quantity-based POC method is represented by results analysis method 09 or results analysis type E withprofit indicator C.

Apportionment/Account Assignment of Revenue in Excess of Billings

In the standard system, the revenue in excess of billings is updated as a separate value for each object. Thevalue can therefore be posted to only one G/L account for each company code. The same applies to therevenue surplus. Sometimes an additional or more detailed differentiation is desirable here. There are thefollowing options:

Apportioning the values to the revenue line IDs to update them to different results analysis costelements. The assignment of the revenue line IDs is based on the revenue elements. Note 38070describes such a solution.

Changing the results analysis cost element in customer enhancement 4 of results analysis on the basisof characteristics in the master record of the object.

The different results analysis cost elements enable differentiated account determination in the posting rule.For example, the revenue in excess of billings can be posted to different G/L accounts for the differentrelationship types between the companies (separate, affiliated, associated, etc.) .

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Trading Partner Number and Other Characteristics

The BADI K_SETTLEMENT_1 enables information such as the following to be added to the postingdocument:

Trading partner number (Note 619443) Transaction type (Note 654231) Partner profit center (Note 654817) Functional area (Note 664059)

Parallel Ledger Solution

Results analysis supports the parallel ledger solution. This is an alternative to the method of representing thevaluation with multiple accounting principles using accounts. The parallel ledger solution is available fromRelease 4.7.

This solution enables the lines of the posting rules to be assigned to an accounting principle.

Runtime Considerations with Multiple Valuations

To keep runtimes down, it may be useful to: Represent two valuation procedures with only one results analysis version. The standard system

provides profit indicators P and U, which combine revenue-based and cost-based POC determination.The decision to use profit indicators P and U depends on whether the profit is to be reported in costing-based profitability analysis (CO-PA) based on costs or revenue. In both cases, the values of bothmethods are present for the postings of the inventories and reserves in Financial Accounting.However, representing two valuation procedures with only one results analysis version usually requiresa customer enhancement.

Valuate only the objects with both methods whose valuation result actually differs. This frequentlyaffects only the objects whose order value is higher than a certain amount.

The Accounting Principle parameter in the posting rule.

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Activity Received But No Invoice

Sometimes you may want to include a received activity in the valuation of an object in results analysis eventhough no vendor invoice has been received. To achieve this, you can in principle use the following valuecategories:

Manual commitment(Commitment parameter = F orCustomer enhancement 5, parameter ADD_OBLIGO_MANUELL = X [Note 607406])

Actual costs from parked documents(Customer enhancement 5, parameter ADD_IST_VORERFASST = X [Note 620112])

Vendor down payments(Commitment parameter = C orCustomer enhancement 5, parameter CREDIT_ANZAHLUNG_ABWEISEN = " ")

Resource-Related Billing/Fixed Price

Valuation using dynamic items (results analysis method 15) calculates the revenue in excess of billings("revenue to be received" in the graphic) with a billing document simulation of the costs yet to be billed. Withcertain objects this satisfies the requirements of IAS. With fixed-price projects, for example, it is stillnecessary to valuate the object with a percentage of completion.

The figure shows how valuation with dynamic items can represent the inventories in the profit and lossstatement.

Shipping Items of a Sales Order for Make-to-Order Production

Sales orders for make-to-order production sometimes contain shipping items. You may want to include theseshipping items in results analysis in some way. In principle, this can be achieved with the customerenhancements of results analysis, but there is no standard solution.

Valuated Project Stock

Costsinvoiced

revenue

Costs to beinvoiced

Revenuefor coststo be

Results analysis with resource related billing

revenue+ work in process (= revenue for costs to be

invoiced)– costs (= costs invoiced + costs to be invoiced)

= POC result

POC method „COS method“

revenue+ work in process (= costs to be invoiced)

– costs (= costs invoiced + costs to be invoiced)

= COS result

P&L P&L

FI

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Sometimes you may want to have the consumption used to create the valuated project stock or sales orderstock in production flow directly into valuation. Note 616869 describes a possible solution.

Excluding Certain Overhead Costs

It is possible to exclude from valuation certain overhead costs that were allocated to an object. Provided thatsuch costs were allocated with particular cost elements, the cost elements are assigned to a special line IDand the line ID is given the category N or D. If the values of this special line ID are to be settled to profitabilityanalysis, the category must be D. In some conditions you select the special function C in the valuationmethod as a supplement. Then the planned values of the special line ID are not included in the calculation ofreserves for imminent loss.

Differentiation Against SD Revenue Recognition and the Accrual Engine

SD revenue recognition runs on SD orders to which no costs can be assigned and that therefore have no COobject. It is specially adapted to time- or quantity-based revenue recognition of sales orders and contracts. Ina similar way this also applies to the accrual engine, which however offers more functionality in principle.

Valuation Based On German GAAP (HGB)

On average, valuation based on IAS reports the profit of an order earlier than is possible with German GAAP(HGB). For valuation based on German GAAP, only the revenue-based POC method or the completedcontract method are suitable if used as a special case of the revenue-based POC method with orders withonly one billing document and without reserve processing.

In addition to the interpretation of the IAS inventory as "unbilled or POC revenue", since the profit is reportedearlier with IAS than with German GAAP, this can also be interpreted as a higher valuation of the work inprocess, namely at revenue rates (IAS) instead of at cost rates (German GAAP).

In valuation based on German GAAP, another factor is which overhead costs can be capitalized and whichcannot. This is particularly difficult if overhead costs that cannot be capitalized are contained for example inthe prices of activity allocation. Here results analysis offers the capability of defining the assignment of coststo line IDs using percentages of overhead costs that cannot be capitalized:

……

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Results Analysis