The Principles of Recognition Schedule Generation

The principles that Revenue Management follows when generating recognition schedules are set out below. It is useful to start by understanding the two calculation adjustment types that an Equal Split recognition template can use:

  • Retrospective adjustment assumes that a source record's value applies from the schedule start, and aims to distribute changes over the entire schedule.
  • Prospective adjustment assumes that a source record's value applies from today, and aims to distribute changes over future periods.

First Time Generate

The first time a recognition schedule is generated for a source record, Revenue Management schedules the source record's value across its full duration regardless of whether the schedule is generated before, during, or after the source record's time frame. This means that the same schedule is created for a source record regardless of whether its recognition template uses retrospective or prospective adjustment.

First Time Generate with An Opening Balance

The exception to the rule above is when the source record has an opening balance. In this case recognition schedule lines are generated from the opening balance cutoff period to the schedule end date. Depending on the calculation adjustment type used by the source record's template:

  • Retrospective adjustment will create a catchup adjustment in the opening balance cutoff period to correct the amount that Revenue Management calculates should have been scheduled up to that point.
  • Prospective adjustment will schedule the remaining value from the period after the opening balance period.

For an example, see Opening Balances for Recognition Schedules.

Note:

If an unrecognized schedule is regenerated with changes to its opening balance value or cutoff period, the whole schedule is generated anew from the opening balance cutoff period.

Once a schedule has one or more "Complete" schedule lines, its opening balance cannot be updated.

Regenerate Following Source Record Changes

When recognition schedules are regenerated following changes to source records, the calculation adjustment type used by a source record's template affects how its schedule is updated:

  • Retrospective adjustment will create a catchup adjustment in the generate period to correct the amount that Revenue Management calculates should have been scheduled up to that point.
  • Prospective adjustment will distribute the remaining value over future periods. Periods that end before the generate date are not updated regardless of their status (unless they are the final period and an adjustment needs to be made).

For examples, see Generating Recognition Schedules after Revenue or Cost Has Been Recognized.

The following principles apply when regenerating recognition schedules following changes to source records:

  • "Recognizable" schedule lines in the generate period and future periods can be updated to take account of any value change.
  • "Complete" schedule lines in future periods are not updated but an additional schedule line can be created in those periods to take account of any value change.
  • If the source record's start or end date changes causing some "Recognizable" schedule lines to fall outside the source record's duration, those lines are updated to "Invalid" with a value of 0 and their value is accounted for elsewhere in the schedule.
Note:

For information about regenerating following changes to a source record's opening balance, see "First Time Generate with An Opening Balance" above.