This example demonstrates how to create a performance obligation identification rule, which you use to determine how to group order lines into distinct performance obligations within a revenue contract.
Use the report to analyze your standalone selling prices for a selected effective period or range of selected effective periods. The report aids you in analyzing how the standalone selling prices were calculated, by providing a drill down to the standalone sales transaction data used to derive the standalone selling prices.
In this example, your company is a telecommunicationscompany that sells mobile phones and talk and text plans. The smartphoneand plan services are listed as separate item numbers but are pricedand sold as a combined service with its own item number.
A performance obligation rule is assigned a satisfactionmethod for the obligations, which means you need to determine a groupingattribute that lets you distinguish between goods and services thathave a pattern of delivery at a point in time or over time. This isimportant because it drives when the application recognizes revenuefor the obligation, and only goods and services with the same patternof delivery are combined into the same performance obligation.
On further analysis of your inventory item structureand sales order data, you determine that using your inventory itemcategory as a grouping attribute will result in the appropriate performanceobligation representation. However, the item category isn't a namedattribute in the Customer Contract Source Document lines. You workwith your data team and agree that you can provide the item categoryin an extensible attribute. The Revenue Basis Data Import templatepasses the item category to Revenue Management using Extensible LineAttribute Character 43.
Using the telecommunication example, create a performanceobligation identification rule that identifies your sales order linesto be included as performance obligations based on an item category,which is provided in the Extensible Line Attribute Character 43. However,you don't want to include fees within your performance obligations(fees are treated separately and you will create a separate rule forfees). As a result, the rule will contain an exclusion condition.
Fees aren't to be included in the allocation of revenue,however, you want the fees to appear on the accounting contract asexempt performance obligations. You excluded the fee order lines fromyour previous rule, so you need to create a second rule so that theapplication uses fee order lines to create performance obligationsthat are exempted from allocation.
Create Rule for Devices, Text, and Data Plans
-
Navigate to the Manage Performance Obligation IdentificationRules page.
-
Click the Add Row icon to create a new performance obligation identification rule.
-
Enter the listed values in these header fields:
Field
Value
Description
Name
Device, Text and Data Plans
Describes the type of performance obligation therule is being created for.
Priority
30
The lower the value, the higher the priority. Inother words, rules with lower values are applied first.
Enabled
Yes
Indicates that the rule is complete and is readyfor use.
Exempt from Allocation
No
Indicates if the performance obligation is to beincluded in the allocation process.
Satisfaction Method
Allow Partial
Indicates when revenue is to be recognized.
Devolve Performance Obligation
No
If you enable this value the application automaticallydevolves a performance obligation into a series of performance obligations.
-
On the Grouping Attributes section click the Add Row icon to enter the listed valuesfor matching group 1:
See AlsoRevenue Recognition ExplainedField
Value
Description
Source Document Type
Third Party
The source document type the grouping attribute isbeing defined for. You can have multiple source document types definedin one rule.
Source Document Attribute Name
Bill-to Customer Party Identifier
The name of the attribute to be used as the groupingattribute.
Matching group
1
You can use multiple matching criteria for sourcelines to be grouped into a single contract.
Copy to Reference
Disable
When you enable this option for a grouping attributein the rule, the value of the grouping attribute is populated in theReference field in the Manage Customer Contracts page.
When using the Copy to Reference feature, you can:
-
Enable only one source documentattribute name per matching group.
-
Enable the Copy to Reference optiononly when you create the rule.
-
No longer update the Copy to Referenceand Reference Prefix fields once the rule is in use.
-
-
On the Grouping Attributes section, click the Add Row icon again to enter the listed valuesfor matching group 2:
Field
Value
Description
Source Document Type
Third Party
The source document type the grouping attribute isbeing defined for. You can have multiple source document types definedin one rule.
Source Document Attribute Name
Extensible line character attribute 43
The name of the attribute to be used as the groupingattribute.
Matching group
2
You can use multiple matching criteria for sourcelines to be grouped into a single contract.
Copy to Reference
Enable
When you enable this option for a grouping attributein the rule, the value of the grouping attribute is populated in theReference field in the Manage Customer Contracts page.
When using the Copy to Reference feature, you can:
-
Enable only one source documentattribute name per matching group.
-
Enable the Copy to Reference optiononly when you create the rule.
-
No longer update the Copy to Referenceand Reference Prefix fields once the rule is in use.
-
-
In the Excluded Conditions section, click Add Condition.
-
Enter the value in this table:
Field
Value
Description
Conditions
Extensible line character attribute 43 = Fees
Your company offers several different types of productofferings and services, including phones, services, data plans, andfees. Fees should not be included as performance obligations. Theexcluded condition prevents fees from being included.
-
Click Save and Close to create the performance obligation identification rule.
Create Rule for Fees
-
Navigate to the Manage Performance Obligation IdentificationRules page.
-
Click the Add Row icon to create a second performance obligation identification rule.
-
Enter the listed values in these header fields:
Field
Value
Description
Name
Telecommunications Fees
Describes the type of performance obligation therule is being created for.
Priority
65
The lower the value, the higher the priority. Inother words, rules with lower values are applied first.
Enabled
Yes
Indicates that the rule is complete and is readyfor use.
Exempt from Allocation
Yes
Indicates if the performance obligation is to beincluded in the allocation process.
Satisfaction Method
Allow Partial
Indicates when revenue is to be recognized.
Devolve Performance Obligation
No
If you enable this value the application automaticallydevolves a performance obligation into a series of performance obligations.
-
On the Grouping Attributes section click the Add Row icon to enter the listed valuesfor matching group 1:
Field
Value
Description
Source Document Type
Third Party
The source document type the grouping attribute isbeing defined for. You can have multiple source document types definedin one rule.
Source Document Attribute Name
Bill-to Customer Party Identifier
The name of the attribute to be used as the groupingattribute.
Matching group
1
You can use multiple matching criteria for sourcelines to be grouped into a single contract.
Copy to Reference
Disable
When you enable this option for a grouping attributein the rule, the value of the grouping attribute is populated in theReference field in the Manage Customer Contracts page.
When using the Copy to Reference feature, you can:
-
Enable only one source documentattribute name per matching group.
-
Enable the Copy to Reference optiononly when you create the rule.
-
No longer update the Copy to Referenceand Reference Prefix fields once the rule is in use.
-
-
On the Grouping Attributes section, click the Add Row icon again to enter the listed valuesfor matching group 2:
Field
Value
Description
Source Document Type
Third Party
The source document type the grouping attribute isbeing defined for. You can have multiple source document types definedin one rule.
Source Document Attribute Name
Extensible line character attribute 43
The name of the attribute to be used as the groupingattribute.
Matching group
2
You can use multiple matching criteria for sourcelines to be grouped into a single contract.
Copy to Reference
Enable
When you enable this option for a grouping attributein the rule, the value of the grouping attribute is populated in theReference field in the Manage Customer Contracts page.
When using the Copy to Reference feature, you can:
-
Enable only one source documentattribute name per matching group.
-
Enable the Copy to Reference optiononly when you create the rule.
-
No longer update the Copy to Referenceand Reference Prefix fields once the rule is in use.
-
-
In the Excluded Conditions section, click Add Condition.
-
Enter the value in this table:
Field
Value
Description
Conditions
Extensible Line Character Attribute 43 != Fees
Indicates that in this rule, any item categoriesthat aren't equal to fees are ignored. The application processes onlylines with an item category of Fees. The application then identifiesthese lines as performance obligations that are exempted from allocation.
-
Click Save and Close to create the performance obligation identification rule.
