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Service Contract Amortization Process

Posted on July 13th, 2012 by Sanjit Anand ||Email This Post Email This Post

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When billing, the system moves the entire billed amount to long-term revenue. When you use amortization, the system moves anything from today’s date plus twelve months to short-term revenue. The system moves anything from the beginning of the contract through the end of the amortization period to recognized revenue.

For service contracts, the Amortization Process is a method of moving long-term revenue to short-term revenue, and then short-term revenue to recognized revenue.

Long-term revenue is contracted for more than a 12-month period.

Short-term revenue is contracted within a 12-month period. Recognized revenue is contracted from the beginning of the contract through the end of the amortization period.
Amortization enables you to manage revenue by moving long-term revenue to short-term revenue, and then to earned or recognized revenue. This system only amortizes billed
revenue. When billing, the system moves the entire billed amount to long-term revenue.

When you use amortization, the system moves anything from today’s date plus twelve months to short-term revenue. The system moves anything from the beginning of the
contract through the end of the amortization period to recognized revenue.

In Oracle EBS , you don’t have any out-of-box feature , you can customize, in order to get , which consist of two process , identifing the new schedule line and GL journal line.

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