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How to handle variable concideration by SAP RAR

former_member190573
Participant
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Hi Experts,

SAP RAR is designed to fit the accounting standards ASC606 and IFRS15. Variable consideration is one the most important concept. Could you please let me know any integrated solution offered by SAP RAR for the following scenarios.

Scenario 1: significant financing component.

When adjusting the promised amount of consideration for a significant financing component, an entity shall use the discount rate that would be reflected in a separate financing transaction between the entity and its customer at contract inception.

Scenario 2: Holdback of sales revenue.

For holdback scnearios like discounts, credits, rebates, penalties, sales returns, refunds, price concessions etc, how to manage the probability of holdback situtation and its accounting simutanously.

Highly appreciated that you can suggest a general idea and we can discuss with more details if needed.

Hi Eric,

For financial component, RAR currently don't yet have standard solution due to the following reason:

1. The discount rate definition and calculation of interest income is not available in RAR,

2. And also the following change process (such as the change of discount rate and transaction price) is also not defined by RAR.

For holdback of sales revenue, there is also no standard integration, because the holdback scenarios heavily depends on the operational documents such as sales order, or provide contracts.

The customers uses variety of processes ,and therefore it is difficult to RAR to provide a standard integrated solution because currently there is no standard process to support all the holdback scenarios.

Best Regards

Xin

former_member190573
Participant
0 Kudos

Thanks for your informative reply! Xin. That is the exact conclustion I am trying to figure out.

Btw, in case, variable consideration is not available in SAP RAR standard function, may I know such kinds of requirement can be fit in Sales Distribution or not? Or any other SAP products or modules can manage it?

Best Regards!

Eric

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