Revenue Recognition Maintenance Overview
Revenue contracts are made up of performance obligations. Performance Obligations are created for the line items on a sales order. Each performance obligation is assigned a recognition rule that governs how and when the order revenue is recognized. Each performance obligation has only one revenue recognition rule, but can have one or more order lines assigned to it.
When creating a revenue contract, it is your decision how many performance obligations a contract has and how many order lines are grouped under a single performance obligation. Assess the different order lines and determine whether the order line itself represents a single performance obligation. If so, create a performance obligation and assign the order line to it.
However, if an order line is linked to another order line—possibly on another sales order—the two order lines must be combined under a single performance obligation. In this case, you create a performance obligation and assign the two order lines to it. The performance obligation only ever has a single revenue recognition rule and both order lines must fulfill the rule for the revenue to be recognized.
Important: Revenue contracts are created at domain level. Therefore, you can create a revenue contract in one entity of a domain, but modify or delete the contract in another entity of the same domain. You can also attach sales orders, trailer charges, and pending invoices from multiple entities in the domain to the performance obligations of a single revenue contract.