SECTIONS
This topic illustrates how the different Equal Split Months calculation types affect the amounts calculated during revenue recognition. Both revenue and cost amounts are calculated in the same way, but this topic refers to revenue only.
Imagine that your source record is a contract line starting on January 4, 2021 and ending on June 23, 2021. Its total revenue is 15000.
This means that the source record is recognized over 28 days in its first period (January 4 - January 31) and over 23 days in its last period (June 1 - June 23). The source record's total duration from January 4 to June 23 is 171 days.
The table below shows how revenue is calculated by the different Equal Split Months calculation types. The calculations are explained in more detail below the table.
|
|
Actual Days in Period |
Equal Split Months |
Equal Split Months / Part Periods |
Equal Split Months / Actual Days in Part Periods |
|---|---|---|---|---|
| Period 1 January 4-January 31 | 28 | 2500 | 2709.68 | 2456.14 |
| Period 2 February | 28 | 2500 | 3000 | 2631.58 |
| Period 3 March | 31 | 2500 | 3000 | 2631.58 |
| Period 4 April | 30 | 2500 | 3000 | 2631.58 |
| Period 5 May | 31 | 2500 | 3000 | 2631.58 |
| Period 6 June 1 - June 23 | 23 | 2500 | 290.32 | 2017.54 |
| Total | 171 | 15000 | 15000 | 15000 |
Equal Split Months
Revenue is split equally across all periods, including part periods. So in this example, total revenue is split equally across 6 periods: 15000 / 6 = 2500
Equal Split Months / Part Periods
The part periods (January and June) are counted as one whole period. So in this example, total revenue is split across 5 whole periods: 15000 / 5 = 3000.
The first part period's revenue is then calculated based on the number of days that the source record is recognized over in the first period. So in this example, the source record is recognized over 28 days in a month that has 31 days.
January's revenue amount is: (3000 / 31) x 28 = 2709.68
The last part period's revenue is the remainder.
June's revenue amount is: 3000 - 2709.68 = 290.32
Equal Split Months / Actual Days in Part Periods
Revenue amounts for the first and last part periods are calculated based on the number of days that the source record is recognized over in those periods, as a proportion of the total number of days that the source record is recognized over (171 days in this example).
January's revenue amount is (15000 / 171) * 28 = 2456.14
June's revenue amount is (15000 / 171) * 23 = 2017.54
These part period amounts are summed (4473.68) and subtracted from the source record's total revenue:
15000 - 4473.68 = 10526.32
The remainder is then split equally across the whole periods:
10526.32 / 4 = 2631.58