Revenue recognition key EPMFC EPPM (Project Management) module in SAP S/4HANA Cloud, public edition.

[summy]

I have a question about the EPPM (Project Management) module in SAP S/4HANA Cloud, public edition. With the revenue recognition key EPMFC, revenue is recognized based on the cost-based percentage-of-completion method. When actual costs exceed planned costs, can the progress rate exceed 100% and be recognized accordingly? Or does the progress rate cap at 100% even if actual costs surpass planned costs?

Examples:
- When planned cost = actual cost:
Planned cost 500, actual cost 500, revenue 1,000 (100%)
- When planned cost > actual cost:
Planned cost 500, actual cost 250, revenue 500 (50%)
- Questioned case: when planned cost < actual cost:
Is it planned cost 500, actual cost 1,000, revenue 1,000 (100%), or
planned cost 500, actual cost 1,000, revenue 2,000 (200%)?

[Chris1973]

Good day @summy 

Thank you for your question.

I recommend you consult Cost-Based Percentage of Completion,  Event-Based Revenue Recognition & Revenue and Cost Accounting for more details.

To summarise, when you use the cost-based revenue recognition key EPMFC in public cloud, the system caps the percentage at 100%, even if your actual costs exceed planned costs. The cost overrun will not trigger additional revenue recognition beyond the planned revenue. This is designed to align with IFRS 15 and GAAP, thereby ensuring that recognised revenue cannot exceed the contractual revenue. Therefore, in your example, when your planned cost = 500 and actual cost = 1,000, the recognised revenue remains 1,000 which is your defined 100% and not 2,000 which will equal 200%.

Let me know if you have further questions.

Best regards

Chris

[summy]

Thank you for your confirmation. I have also noted the summary. Is it documented in the SAP Help Portal that 100% is the limit? If so, could you please share the link and the specific location where it is stated? Thank you in advance.