Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 606
FASB ASC 606 states that an entity shall recognize revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service (i.e., an asset) to a customer.
If you are required to recognize revenue based on this standard, you can do it in Business Central.
Setup in Business Central
The first step is to define the Project WIP Method correctly. To recognize costs, use Cost Value which is calculated as Usage Total Costs less WIP Cost. For revenue, use Sales Value which is calculated as Usage Total Price multiplied by the expected invoicing ratio.
To keep the illustration simple, we have one Billable Line Type and very few Budget lines. Of course, you can use lines of the combined Budget and Billable type. The Line Type will be dependent on how you track your project costs and billing.
When all is said and done, for our calculation to work properly, the sum of Total Cost from all budget lines must be equal to the sum of Total Cost on all billable lines. The sum of the Line Amount from all budget lines must be equal to the sum of the Line Amount on all billable lines.
Something that I found to be helpful is rearranging the Job Task Line fields. It makes it easier to confirm that you have set up the planning lines correctly and to see the results as time progresses, additional costs are posted, and revenue is recognized.
To read my MSDynamicsWorld article on the subject in its entirety, go to Challenge Issued: A special request for ASC 606 revenue recognition in Microsoft Dynamics 365 Business Central
