Mfg CM Advisor Webcast 2011 0809

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1 2009 Oracle Corporation Proprietary and Confidential


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Day, Date, 2004

time p.m. ET

Teleconference Access:

North America: xxxx

International: xxxx

Password: Advisor

Tues., Aug 9, 2011, 2011

11:00 am ET / 9:00 amMT / 8:00 am PT

North America:

(866) 627-3315

International:

+1-706-758-7972

Doc Id: 1148600.1

Conf Id:

18538426 or Oracle CM

Upcoming Enterprise Asset Management

(EAM) Community Webcasts:

September 13, 2011: To Be Announced in Doc Id

1167580.1

October 11, 2011: To Be Announced in Doc Id

1167580.1

November 8, 2011: To Be Announced in Doc Id

1167580.1

For complete details on Cost Management Webcast Events,

please see Note 1167580.1.

For complete details on All Other upcoming Oracle AdvisorWebcast Events, please Note 398884.1.

Do you have any requests for future Cost Management Advisor

Webcast Events? Please email your suggestions to

[email protected], subject: Topics of Interest.

Cost Management Advisor Webcast


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COGS Workflow and Troubleshooting

Feedback/ Comments to:

Divya Sudhakaran [email protected]

Ramya Balasubramanian [email protected]


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The following is intended to outline our general

product direction. It is intended for information

purposes only, and may not be incorporated into

any contract. It is not a commitment to deliver any

material, code, or functionality, and should not be

relied upon in making purchasing decision. The

development, release, and timing of any features

or functionality described for Oracles products

remains at the sole discretion of Oracle.

Safe Harbor Statement


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COGS Workflow and Troubleshooting

Feedback/ Comments to:

Divya Sudhakaran [email protected]

Ramya Balasubramanian [email protected]


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AGENDA

Definitions

Principles

COGS Workflow and Dataflow

TroubleshootingDiagnostics


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DEFINITIONS

Revenue

The gross inflow of economic benefits (cash, receivables, other assets)

arising from the ordinary operating activities of an entity (such as salesof goods, sales of services, interest, royalties, and dividends). [IAS 18.7]

Cost Of Goods Sold (COGS)

The amount determined by subtracting the value of the ending

merchandise inventory from the sum of the beginning merchandise

inventory and the net purchases for the fiscal period.

Matching Principle

All of the expenses incurred in generating revenue should be matchedwith the revenue generated, period by period.

Account Receivable

A current asset representing money due for services performed or

merchandise sold on credit.

COGS = Opening Stock + Purchases + Direct Expenses Closing Stock Stock Unused for trading

COGS= Sales Gross Profit


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PRINCIPLES

US GAAP matching principle requires matching of revenues andexpenses in the period when they are earned and incurred.

IAS 18 requires that - Revenues and related expenses must bematched. If future related expenses couldnt be measuredreliably, revenue recognition should be deferred.

Business Requirements to be considered

COGS and Revenue should be recognized in the same period.If revenue or costs of sales recognition is deferred then corresponding cost of sales orrevenue should be deferred as well and recognized in the accounting period when the initialdeferral is recognized.

Revenue and COGS should be recognized proportionally.

Revenue may only be partially recognized due to partial acceptance. Only that portion ofCOGS that corresponds to the recognized revenue should itself be recorded.

Revenue reversal should result in COGS reversal.Revenue recognition can be undone (rolled back) in which case the COGS corresponding to

the portions of rolled-back revenue should be likewise credited.


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ACCOUNTING for COGS in R11 and R12

Sales Order Issue transaction is created in MTL_MATERIAL_TRANSACTIONSwhen Sales Order is Ship Confirmed.

In 11i, The accounting for

Debit Credit

Sales Order Issue COGS Inventory

In R12, concept of Deferred COGS is introduced to support Revenue/COGSMatching principle.

Debit Credit

Sales Order Issue DCOGS(36) Inventory (1)

COGS Recognition COGS(35) DCOGS(36)


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COGS, DCOGS WORKFLOW

Revenue / COGS Recognition Process Flow:-

1.Sales order has to be booked.2.Pick Release the SO and Ship Confirm.

3.Sales order Issue.

4.Review Sales Order Issue transactions and Source and destination

transactions in the Material Transactions form.

5.Run the Workflow Background Process request.6.Create the Invoice with the Auto invoice request.

7.Check the Invoice in AR.

8.Recognize the revenue in AR.

9.After recognizing the revenue, accept it.

10.Run the following 3 Programs from Cost Management SLA.

Record Order Management Transactions.

Collect Revenue Recognition Information.

Generate COGS Recognition


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SETUP


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DATAFLOW Sales Order Creation


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Event type 1 in cst_cogs_events signifies sales order issue


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If Revenue Recognition is not run, the account_set_flag in

table ra_cust_trx_line_gl_dist_all will be Y.

Once Revenue Recognition is run, It changes to N as below


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Record Order Management Transactions

If the Sales order issue transactions/ RMA Return

transactions remain uncosted, then The Record Order

Management Transactions concurrent program can

be executed, which picks up these transactions and

inserts rows in Cogs events and Cogs RevenueMatching Tables to enable remaining programs

(Collect Revenue Recognition Information and

Generate COGS Recognition) to complete.

This process is not mandatory if the transactions arealready costed.


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COLLECT REVENUE RECOGNITION INFORMATION


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Once Collect Revenue Recognition is run, a row gets

inserted in the cst_revenue_recognition_lines table

with potentiallly_unmatched_flag as Y


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GENERATE COGS RECOGNITION EVENTS


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Cst_cogs_events will have a event_type of 3 and

cogs_percentage of 1 which denotes COGS recognition

after the Generate COGS recognition program is run

The potentiallly_unmatched_flag in

cst_revenue_recognition_lines table becomes NULL


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COGS Revenue Matching Report

COGS Revenue Matching Report shows the revenue

and COGS information of sales order that fall within

the user specified date range by sales order line.


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Return Material Authorization(RMA)

When the goods are returned by the customer to thesupplier, then it is called as RMA Receipt.

With respect to COGS and DCOGS Accounting

Entries for RMA, there are 2 Scenarios which can beexplained as follows.


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Scenario I:-

1) Create a Sales Order Line and Ship the line. Costthe Sales Order issue transaction.

2) DO Revenue Recognition and run Collect Revenue

Recognition Information program.

3) Run Generate COGS Recognition Events program.4) Do RMA against the Sales Order created in step-1.

5) Do RMA Receipt and cost this RMA also.

Here RMA will hit COGS and Inventory accounts and

COGS Recognition event will have the full Sales

Order line quantity.


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Scenario II:-

1) Create a Sales Order Line and Ship the line. Cost

the Sales Order issue transaction.

2) DO Revenue Recognition and run Collect Revenue

Recognition Information program.

3) Create a RMA against the Sales Order created in

step-1 and do RMA Receipt and cost the transaction.

4) Now run Generate COGS Recognition events

program.

Here COGS Recognition event will have qty =

(salesorder line qty - RMA line qty) and RMA hitsInventory and DCOGS Accounts.


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Diagnostics COGSDIAG.SQL

How to Use COGSDIAG.sql----------------------------------------

Execute COGSDIAG.sql for any Sales Order you wish

to troubleshoot using 'Run Script' command (or) run

individual queries as per requirement.

The SQL returns rows for all tables related to COGS

Recognition from OM, AR, Inventory and Costing.

COGS Dataflow and Diagnostics [Video] (Doc ID1307906.1)


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Acknowledgements

Vamshikrishna Katakam -Cost Management

Development

NOTES:

867912.1 - COGS Workflow

COGS AND DCOGS RECOGNITION ACCOUNTING

USEFUL TIPS (Doc ID 1060202.1)

COGS/ Deferred COGS common problems (Doc ID

1314335.1)

Internal Troubleshooting Tips for Revenue

Recognition Unprocessed Transactions (Doc ID

562584.1)


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50

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To ask a question online,

use the Q&A area.

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aloud in the order received.

Question can also be asked

on the Process

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Vi it M O l C iti


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Cost Management Advisor Webcast

Calendar (Doc ID 1167580.1)

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Mfg CM Advisor Webcast 2011 0809

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