Deferred COGS: How to use this feature of Oracle Apps R12

In R11i When a Sales order is shipped and interface trip stop is completed. This make a call to COGS workflow to generate the COGS account. This then generate f ollowing accounting. Cr Dr Inventory Valuation account $250 COGS Account $250

In R12 when a sales order is shipped and interface trip stop is completed the fo llowing accounting entries gets generated. Cr Dr Inventory Valuation account Deferred COGS Account $250 $250

After the AR invoice is generated and the revenue is recognised (Considering you don t have revenue recognition policies or specific accounting rules), following program will create COGS recognition transaction. This will reflect a change in the revenue recognition percentage for a sales order line. 1. Collect Revenue Recognition Information program: This program will collect th e change in revenue recognition percentage based on AR events within the user sp ecified date range. It collects invoice information of the sale order line from RA_CUST_TRX_LINES_ALL and RA_CUST_TRX_LINE_GL_DIST_ALL after the revenue is reco gnized and check the percentage revenue recognized. It then insert information i n CST_REVENUE_RECOGNITION_LINE. Navigation: Cost > COGS Recognition > Collect Revenue Recognition Information 2. Generate COGS Recognition Events: This program will create the COGS recognit ion transaction for each sales order line where there is a mismatch between the latest revenue recognition percentage and the current COGS recognition percentag e. This is the program which also makes the transactions costed by creating thes e accounting entries. So cost manager is not used to make these transactions as costed in R12.The COGS account in this entry is taken from the distribution_acco unt in mtl_material_transactions table (which was generated earlier by COGS work flow). Cr ue %) Dr ue %) Navigation: Cost > COGS Recognition > Generate COGS Recognition Events This particular COGS recognition transaction actually correspond to a revenue re cognition percentage change. As we have seen above this new feature does help in resolving some of the key ac counting issues but we need to be aware of the following also With this feature the COGS recognition now requires few extra concurrent reques ts to be submitted. AR revenue need to be recognized to have COGS recognized This functionality is not optional as it is mandatory to be used in R12 To make the complete set of transactions visible in the Material Transaction scr een, Include Logical Transaction checkbox need to be checked. This concludes our discussion about Deferred COGS. Now I am planning to pick so Deferred account COGS Account $250 (Actual Reven $250 (Actual Reven

me topic from procurement as we have not touched that area till date.