## Recognizing Profit

This chapter provides an overview of profit recognition and discusses how to:

- Update the percent complete for a job.

- Generate profit recognition data.

- Remove a recognition version.

- Revise profit recognition information.

- Create profit recognition journal entries.

### Understanding Profit Recognition

You use the job progress applications to track actual costs compared to the expected (budgeted) costs based on the percent complete of each task. The percent complete is determined by the computation method that is assigned to each account. For profit recognition, you use the percent complete to project the final costs and projected final revenue for the entire job. Profit recognition is an accounting process that you can use to record the revenue earned or lost, based on the percent that a job is complete at any time during the progress of the job. Profit recognition is independent of the billing status of the job; you can recognize profit for a job even if you have not billed the customer for the completed work.

When you run the profit recognition programs, the system calculates the profit or loss for the period based on the actual and projected final values (costs and revenues). The system then generates journal entries to adjust the actual costs and revenue according to:

- Whether you enter accrued or deferred costs.

- Whether you recognize deferred revenue all at once or proportionately over the life of the job.

- Whether you have over billings or under billings for the period.

- Whether you calculate profit based on revenue or costs.

- Whether you have reached the threshold percent complete.

The system generates the journal entries to the accounts that are set up in the profit recognition automatic accounting instructions (AAIs), or to the accounts specified in processing options. Many of the journal entries are accrued amounts that the system reverses in the next period. The system tracks profit by period, quarter, year, and job.

### Updating the Percent Complete for a Job

This section provides an overview of the results of updating the percent complete and discusses how to enter the percent complete for a job.

#### Understanding the Results of Updating the Percent Complete

When you run the Profit Recognition Build program (R51800), processing options specify either to calculate the percent complete based on projected final values or to use the value from the F% ledger:

- If you select the processing option to calculate the percent complete, the system uses the formula AA / HA.

- If you select the processing option to use the value from the F% ledger, you must first enter it.

You use the Update Percent Complete program (P511112) to enter the percent complete for the job. You can display all the jobs for a company or only the open jobs. Besides the search criteria that you can use to locate the job records, the only field available to update is Percent Complete. When you enter the percent complete, the system updates the value to the F% ledger for the job account in the specified period. The job account is composed of the business unit (job number) only; the object (cost code) and subsidiary (cost type) fields are blank. The system uses the percent complete that you enter to calculate projected final values and profit values.

The P511112 program has no processing options.

Note. If you have already generated the profit recognition records, you can enter the percent complete for the job using the Group Job Adjustments (P5144) program or the Single Job Adjustments (P51440) program.

#### Form Used to Update the Percent Complete for a Job

Form Name | FormID | Navigation | Usage
Update Percent Complete | W511112B | Profit Recognition (G5122), Update Percent Complete Select a job on Work with Job Master. | Enter the percent complete for a job.

#### Entering the Percent Complete for a Job

Access the Update Percent Complete form.

### Generating Profit Recognition Data

This section provides an overview of the Profit Recognition Build program (R51800), lists prerequisites, and discusses how to:

- Generate profit recognition data.

- Set processing options for Profit Recognition Build (R51800).

#### Understanding the Profit Recognition Build Program (R51800)

The first step in the profit recognition process is to generate the profit recognition data. You can generate the information in preliminary or final mode:

- In preliminary mode, the system generates a report of the actual and budget amounts and calculates the projected final values and percent complete. Using the report, you can validate that all transactions have been included. If you need to revise budget or actual amounts, you can do so easily and rerun the report.

- In final mode, the system performs the same calculations and generates the same report as it does when you run the program in preliminary mode, but it also generates records in the profit recognition tables (F5144 and F5145). After you have generated records in the profit recognition tables, you can still adjust the projected final amounts or the percent complete. But if you need to adjust budget or actual amounts, you must do one of the following procedures:

  - Run the Remove a Recognition Version program (R51810), enter the revisions, and then rerun Profit Recognition Build.

    The system generates new profit recognition information based on the revisions that you make.

  - Enter your revisions, and Profit Recognition Build.

    The system generates adjusting journal entries for the revisions (incremental differences) only.

Depending on whether you want the system to base profit on costs or revenues and on the information that you enter, the system calculates one or more of these values:

- The percentage of completion for the job.

  If you do not enter a percent complete value directly into the F% ledger, the system calculates it by dividing the amounts in the AA ledger by the amounts in the HA ledger. The amounts in the AA ledger can be costs, revenues, or both, depending on the setting of the Recognition Method processing option.

  The percent complete for a job cannot be greater than 100 percent or less than 0 percent. If the percent complete is greater than 100 percent, the system uses 100 percent to calculate profit. If the percent complete is less than 0, the system uses 0 to calculate profit.

- The projected final amounts.

  If you do not enter a percent complete, the system uses the total from the HA ledger for the job. If you enter a percent complete, the system recalculates the projected final value by dividing the actual amount by the percent complete. For example, if the percent complete were 25 percent and the actual cost were 1000, the projected final cost would be 4,000.

- The earned cost and revenue.

  The system calculates earned amounts by multiplying the projected final amounts by the percent complete.

- Over and under billing amounts.

  The system calculates over and under values by subtracting the earned amounts from the actual amounts.

- The amount of profit.

  The system calculates profit by subtracting cost from revenue.

You can set up a threshold percent complete so that the system does not calculate the profit for a job until the percentage of completion is greater than or equal to the threshold percent complete:

- If the percentage of completion is less than the threshold, the system records the earned job-to-date profit as zero.

- If the percentage of completion is greater than the threshold percent, and you calculate profit based on costs, the system forces the revenue earned to equal the cost earned.

- If the percentage of completion is greater than the threshold percent, and you calculate profit based on revenue, the system forces the cost earned to equal the revenue earned.

- If the percentage of completion is greater than the threshold percent and you calculate profit using whichever results in the lower profit (cost or revenue), the system adjusts the appropriate account accordingly.

- If the percent of completion is equal to or greater than the threshold, you can immediately recognize any profit that was deferred or you can amortize the profit over the remaining life of the job.

Profit can be recognized for the project (across multiple jobs) or at the job level. In addition, you can regenerate profit information for a closed period when adjustments are needed.

When you run the Profit Recognition Build program in final mode, the system:

- Generates one record in the Profit Recognition table (F5144).

  - The system updates the version fields (VERS and VER) with the version number that you used to run Profit Recognition Build.

  - The system updates the next number field (NNBR) with the next number that it retrieves from the Next Numbers table (F0002).

  - The system updates the cost and revenue accounts for actual, revised budget, and projected final amounts.

    The system uses the JCCA and JCST AAIs to determine the range of revenue and cost accounts.

  - The system updates the Record Requires Regeneration field (G7ZFU1) to Y to indicate that journal entries have not been generated for the profit recognition records.

- Generates one record for each cost type in the Profit Recognition Account Balance table (F5145).

  The system calculates the amount of profit for each cost type.

- Generates a report (Profit Recognition File Build) of the information that it calculates.

  You can review the information online using the Single Job Adjustments program or the Group Job Adjustments program.

- If you set a processing option, the system generates the Executive Summary Report. The difference between this report and the Profit Recognition File Build report is that it also includes the over billing and under billing amounts and provision for loss amounts, if any. It also prints profit information by project, instead of by job. If you do not specify to generate the Executive Summary Report, you can generate it at any time by selecting the option from the menu.

After you generate profit recognition information in final mode, you can make online adjustments using the P51440 program or the P5144 program. You can also generate journal entries to update the appropriate cost and revenue accounts, or delete the version and remove the profit recognition records so that you can make changes to source tables and rebuild it based on different criteria.

See Also

Job Cost Summary Reports: A to Z

#### Prerequisites

Before you complete the task described:

- Verify that user-defined code (UDC) table 51/IS is set up for the job type and cost type and AAI, if desired.

  See Understanding UDCs for Job Cost.

- Verify that the JD Edwards EnterpriseOne Job Cost AAIs, specifically the ranges that are defined by the JCCA and JCST AAIs, are set up to identify the revenue and cost accounts.

  See Setting Up AAIs for Job Cost.

#### Generating Profit Recognition Data

Select Profit Recognition (G5122), Profit Recognition Build.

#### Setting Processing Options for Profit Recognition Build (R51800)

Processing options enable you to specify the default processing for programs and reports.

Process

1. Process Mode | Specify whether to run the program in proof or final mode. Values are: Blank: Run the program in proof (preliminary) mode. The system calculates final projected values and profit information and prints a report. 1: The system performs the same calculations as it does when you run the program in proof (preliminary) mode, but additionally updates the F5144 and F5145 tables.
2. Period End Date | Specify the date through which the system calculates profit information. Because the system stores account balances by period, the system always calculates balances based on the last day of the period regardless of the day that you enter. For example, if June 30 is the last day of the period and you specify June 15, the system uses June 30. You must enter a date in this processing option; otherwise, the system prints the error message No period end date in processing option on the report.
3. Period End Quarter Date | Specify the prior quarter end date for which the system calculated profit information. If you leave this processing option blank, the system uses the Earned Job to Date amounts as the Earned Current Quarter amounts.
4. Company | Specify the company to assign to the profit recognition records that the system generates. The system uses the company number that you enter to generate the journal entries when you run the Create Journal Entries program (R51444). The company number that you specify must be set up with a complete balance sheet.
5. Summarization Level | Specify the summarization level to store profit recognition information in table F5144. Values are: 1: Project level. 2: Job level. 3: Subledger level. Note. Because the system does not update subledger information to projected final records (HA and HU), the system cannot calculate profit recognition by subledger. You use this processing option to summarize records by subledger for display purposes only. Note. If you are using the JD Edwards EnterpriseOne Homebuilder Management system, you must enter 3 for this processing option to view cost of sales accounts at the option level in the P5144 program.
6. Threshold | Specify the threshold percent against which the system compares the value of the percent complete to determine whether to calculate profit. The value that you enter for this processing option overrides the value that you entered on the Job Master Revisions form. If the percent complete of the job is less than the threshold amount, the system uses zero as the earned job-to-date profit. Enter the threshold percent as a whole number. For example, enter 15 to specify 15 percent.
7. Defer Preference | Specify whether to recognize all of the deferred profit in the period during which the percent complete exceeds the threshold percent, or allocate it based on the life of the job. Deferred profit is profit that the system calculated when the percent complete was less than the threshold percent.
8. Projected Final Cost | Specify whether to recalculate the projected final amounts based on the percent complete entered in the F% ledger for the job. Values are: Blank: Do not recalculate. The system uses the amounts from the HA ledger for each account. 1: Recalculate.
9. Recognition Method | Specify the method that the system uses to recognize profit. Values are: 1: The system calculates profit based on the values of the cost accounts. The AAI ranges for item JCST identify the cost accounts that the system uses. 2: The system calculates profit based on the values of the revenue accounts. The AAI ranges for item JCCA identify the revenue accounts that the system uses. 3: The system calculates profit using both the cost and revenue methods, and then uses the lower of the two results.

Versions

1. Executive Summary Version | Specify whether to generate the Executive Summary Report (R51443) by entering the version number of the report to use. The system retrieves the processing options for the report based on the version that you enter. If you leave this processing option blank, the system does not generate the Executive Summary Report.

### Removing a Recognition Version

This section provides an overview of recognition versions and record removal and discusses how to:

- Remove a recognition version.

- Set processing options for Remove a Recognition Version (R51810).

#### Understanding Recognition Versions and Record Removal

If you run the R51800 program in final mode and find that the results require changes to the values in the Account Balance table (F0902) using job progress entry or journal entries, you can remove the profit recognition records and regenerate them after you make the desired changes. To remove the profit recognition records from tables F5144 and F5145, you must run the Remove a Recognition Version program. When you run this program, you specify the version that is associated with the records that you want to remove. If you want to remove records for a specific job only, you can also specify a job number. The system removes records for the version and job specified only when the Record Requires Regeneration field (G7ZFU1) in table F5144 is set to Y. If the value of this field is N, journal entries have already been generated for the version and you cannot remove it.

Important! Do not delete the unposted journal entries. Post the journal entries, enter the revisions, and rerun the Profit Recognition Build program for the same period. The system creates journal entries for the incremental differences only based on the changes that you make. You can also post the journal entries, void them, post the voided entries, enter the revisions, and rerun the R51800 program for the same period.

After you remove the profit recognition records and make the necessary changes, you can rerun the R51800 program to regenerate profit recognition records.

#### Removing a Recognition Version

Select Profit Recognition (G5122), Remove a Recognition Version.

#### Setting Processing Options for Remove a Recognition Version (R51810)

Processing options enable you to specify the default processing for programs and reports.

Process

1. Profit Recognition Version | Specify the version of the R51800 program for which you want to remove records from the profit recognition tables (F5144 and F5145). The system removes all records from the tables based on the version that you specify. If you generated profit recognition for more than one job, you can limit the records that the system removes for the version by entering a value in the Profit Recognition Job processing option.
2. Profit Recognition Job | Specify the job number to use to remove records from the profit recognition tables for the version that you entered in the Profit Recognition Version processing option. If you leave this processing option blank, the system removes all records for the version specified.

### Revising Profit Recognition Information

This section provides an overview of revising profit recognition information and discusses how to:

- Set processing options for Group Job Adjustments (P5144).

- Set processing options for Single Job Adjustments (P51440).

- Revise profit recognition records.

- Revise accounts in the profit recognition record.

#### Understanding Revising Profit Recognition Information

After you generate profit recognition records, you might find that you need to make adjustments to the projected final amounts (revenue, cost, and profit) or change the percent complete on the job. Rather than trying to manipulate the factors that the system uses to calculate projected final amounts, which consists of removing the existing profit recognition records and regenerating them, you can manually adjust the projected final values, from which the system derives the profit calculation, using either the Single Job Adjustments program (P51440) or the Group Job Adjustments (P5144) program.

Note. You cannot revise profit records for which journal entries have been generated. If the Version field is blank on the Work with Profit Recognition Versions form, journal entries have been generated, and you cannot revise or remove profit recognition records.

See Revising Profit Recognition Journal Entries.

If you select the P51440 program, you can review and update the information for one job only. If you select the P5144 program, the system displays the profit recognition information for all of the jobs that were updated for the version of the Profit Recognition Build program that you ran. The P5144 program is especially useful if you generated profit recognition records for multiple jobs within a project because you can review all of the information on one form.

Regardless of the program that you select, the system displays values from the profit recognition tables (F5144 and F5145). You can use the adjustment program to revise:

- The profit recognition method.

  If you want to compare the amount of profit based on cost versus revenue (or vice versa), you can change the profit recognition method. The system recalculates projected final values and the percent complete based on the method that you select.

- Accrued or deferred costs.

  If you want to increase actual amounts, enter the accrued cost as a positive number. If you want to decrease the actual amount, enter the deferred cost as a negative number. The system generates reversing journal entries to the accounts associated with AAI items JCAPO and JCAPC for accrued costs, and JCSMI and JCSMJ for deferred costs.

- Projected final values.

  If you enter (force) projected final amounts, the system recalculates the percent complete. The system updates the projected final values to the accounts associated with AAI items JCPFC (projected final cost), JCPFR (projected final revenue), and JCPFP (projected final profit) in the FA ledger.

- Percent complete.

  If you select the Percent Complete check box, the system changes the fields for projected final values to percent complete. The value that you enter depends on the profit recognition method. For example, if profit is based on costs, enter the percent complete in the corresponding cost field. If profit is based on revenue, enter the percent complete in the corresponding revenue field. The system recalculates and displays the projected final amounts based on the percent complete that you enter. The system updates the F% ledger with the percent complete for the account number of the job (this account does not have a cost code or cost type, only a job number).

- Percent complete threshold.

  If you lower the percent complete threshold, the system might revise amounts based on the value in the Deferred Method field. For example, if you recognize deferred profit in the period in which the percent complete is greater than the threshold percent, lowering the threshold might increase the amount of profit because it includes deferred amounts.

- Individual accounts.

  You can add or subtract amounts in the Revised Budget (JA) ledger and the Projected Final (HA) ledger accounts and view the Commitment (PA) ledger and estimate to complete values that are associated with the job.

  Note. If you are using the JD Edwards EnterpriseOne Homebuilder Management system, when you run Profit Recognition Build you must enter 3 for the Summarization Level processing option to view the individual option types in the Single Job Adjustments program. After you make adjustments to the individual accounts, rerun the R15800 program.

Note. You can enter the percent complete or you can enter projected final values; you cannot enter both. If you enter the percent complete, the system calculates projected final values. If you enter projected final values, the system calculates the percent complete. If you do not enter the percent complete or projected final values, the system calculates both amounts.

Any revisions that you make using the job adjustment programs updates table F5144. When you are satisfied with the profit recognition information for the period, you can lock the version of the records to prevent unauthorized changes. When you lock a version, the system updates the G7ULCK (User ID Lock) field in table F5144 with the user ID. Locked versions can be unlocked only by the person who locked the job.

If you want to revise other factors that are related to estimating job profit, such as budget, actual, or commitment amounts, you must do so in the system of origin. In this case, you should delete the profit recognition version, enter the revisions, and rerun the R51800 program.

#### Forms Used to Revise Profit Recognition Information

Form Name | FormID | Navigation | Usage
Work with Profit Recognition Versions | W5144A | Profit Recognition (G5122), Single Job Adjustments or Group Job Adjustments | Review and select the profit recognition records based on the version, job, and effective date that was used to generate them. If the Version field is blank, journal entries have been generated for the profit recognition records and you cannot revise any of the information.
Group Job Adjustments | W5144B | Select a profit recognition version on Work with Profit Recognition Versions. | Review and revise profit recognition records for multiple jobs. You can also lock the version to prevent unauthorized changes by selecting Lock/Unlock from the Row menu, or unlock a version that you locked previously.
Single Job Adjustments | W51440C | Select a profit recognition version on Work with Profit Recognition Versions. | Review and revise the profit recognition record for a single job. You can also lock the version to prevent unauthorized changes by selecting Lock/Unlock from the Form menu, or unlock a version that you locked previously.
Account Adjustment | W51440A | Select Account Adjustment from the Form menu on the Single Job Adjustments form. You can view only the account records for a profit recognition version that contains a value in the Version field on the Work with Profit Recognition Versions form. | Revise accounts in the profit recognition record. Review and revise amounts for individual accounts in the profit recognition record.

#### Setting Processing Options for Group Job Adjustments (P5144)

Processing options enable you to specify the default processing for programs and reports.

Version

1. Job Status Inquiry Version (P512000) | Specify the version of the Job Status Inquiry program (P512000) to use when you access the program from the Row menu. If you leave this processing option blank, the system uses version ZJDE0001.
2. Select Button Exits | Specify the program to run when you select a profit recognition version on the Work with Profit Recognition Versions form. Values are: 1: Run the Group Job Adjustments program (P5144). 2: Run the Single Job Adjustments program (P51440).
3. Purchase Order Entry Version (P4310) | Specify the version of the Purchase Order Entry (P4310) program that the system uses when the program is called from Single Job Adjustment/Account Adjustment. If you leave this processing option blank, the system uses the ZJDE0015 version.

#### Setting Processing Options for Single Job Adjustments (P51440)

Processing options enable you to specify the default processing for programs and reports.

Version

1. Job Status Inquiry Version (P512000) | Specify the version of the P512000 program to use when you access the program from the Row menu. If you leave this processing option blank, the system uses version ZJDE0001.
2. Select Button Exits | Specify the program to run when you select a profit recognition version on the Work with Profit Recognition Versions form. Values are: 1: Run the Group Job Adjustments program (P5144). 2: Run the Single Job Adjustments program (P51440).
3. Purchase Order Entry Version (P4310) | Specify which version of the P4310 program to use when you access the program from the Single Job Adjustment/Account Adjustment form. If you leave this processing option blank, the system uses version ZJDE0015.

#### Revising Profit Recognition Records

Access the Single Job Adjustments form.

You can review and revise the same fields regardless of which job adjustment program you select.

Version | Enter the version of the R51800 program that was used to generate the profit recognition records. If this field is blank, journal entries have been generated for the profit recognition records and you cannot revise the information.
Threshold % | Enter the threshold percent complete from the Job Master Revisions form or in the Threshold field of the Build Profit Recognition program (R51800). You can revise the threshold percent to review the changes to the profit calculations, if any.
Percent Complete Entry | Select this check box to change the Projected Final Amount fields to Percent Complete fields. Enter the percent complete in the field that corresponds to the recognition method. The system recalculates projected final values and redisplays the fields automatically when you click OK.
Recognition Method | Enter the value of the Recognition Method field at the time the R51800 program was run. You can revise the value to review the changes to the projected final values and profit amount. When you change the value of this field, the system moves the Percent Complete field under the corresponding field. For example, if you enter 1, the Percent Complete field appears under the Cost field because it applies to cost. If you enter 2, the Percent Complete field appears under the Revenue field because it applies to revenue.
Effective Date | Specify the date that was entered in the Period End Date field at the time the R51800 program was run.
Accrual (/Deferral) | Enter the amount to adjust the actual cost. If you enter the amount as a positive number (accrual), the system adds the value to the actual cost. If you enter the amount as a negative number (deferral), the system subtracts the value from the actual cost. When you generate journal entries, the system updates the accounts for the corresponding AAI pair (JCACPC and JCAPO for accruals, and JCSMI and JCSMJ for deferrals).
Deferred Method | Enter the value of the Defer Preference field at the time the R51800 program was run. You can enter a different value to review and update the amount of profit. Values are: 1: Recognize deferred profit (profit that was not recognized because the percent complete was less than the threshold percent) in the period in which the percent complete exceeds the threshold percent. 2: Allocate deferred profit proportionately for the life of the job.
Projected Final Amount Revenue | Enter the sum of the amounts in the HA ledger for the range of accounts identified by the JCCA AAIs for the period specified. If you enter (force) a percent complete value, the system updates the value to the F% ledger, and then calculates the projected final revenue using the formula AA/F%. If you enter (force) a projected final revenue amount, the system updates the amount to the FA ledger for audit purposes, and recalculates the amount of projected final profit.
Projected Final Amount Cost | Enter the sum of the amounts in the HA ledger for the range of accounts identified by the JCST AAIs for the period specified. If you enter (force) a percent complete value, the system updates the value to the F% ledger, and then calculates the projected final cost using the formula AA/F%. If you enter (force) a projected final cost amount, the system updates the amount to the FA ledger for audit purposes, and recalculates the amount of projected final profit.
Projected Final Amount Profit | Specify the difference between the revenue and the cost. The system subtracts the cost from the revenue. If you enter a value in this field, you must clear a value from either the Projected Final Amount Revenue field or the Projected Final Amount Cost field. Note. If the projected final profit is less than 0, the system also calculates a provision for loss value.
Projected Final Amount % | Enter the percent of profit based on revenue. The system calculates this amount by dividing the amount of profit by the amount of revenue.
Percent Complete Revenue | Enter the percent complete into this field when the recognition method is 2 (profit is based on revenue). The system displays this field only when you select the Percent Complete Entry check box. The system places the Percent Complete field in the Revenue column to indicate that you should update the Percent Complete Revenue field.
Percent Complete Cost | Enter the percent complete into this field when the recognition method is 1 (profit is based on cost). The system displays this field only when you select the Percent Complete Entry check box. The system places the Percent Complete field in the Cost column to indicate that you should update the Percent Complete Cost field.
Actual to Date Revenue, Actual to Date Cost, Actual to Date Profit and Actual to Date % | Enter the amounts from the AA ledger for the range of accounts identified as revenue accounts by the JCCA AAIs, and for the range of accounts identified as cost accounts by the JCST AAIs. The system subtracts cost from revenue to calculate the profit, and divides the amount of profit by the amount of revenue to calculate the percent.
Percent Complete | Enter (force) a percent complete value for the job. If you do not, the system calculates the percent complete using the formula AA / HA. The field appears in the column that corresponds to the recognition method.
Remaining Revenue, Remaining Cost, Remaining Profit, and Remaining % | The system calculates the remaining revenue and cost amounts by subtracting the Actual to Date amount from the corresponding Projected Final amount. The system subtracts the remaining cost from the remaining revenue to calculate the remaining profit, and divides the remaining profit by the remaining revenue to calculate the remaining percentage.
Revised Budget Revenue, Revised Budget Cost, Revised Budget Profit, and Revised Budget % | Display the sum of the revised budget ledgers for the range of accounts identified as revenue accounts by the JCCA AAIs, and for the range of accounts identified as cost accounts by the JCST AAIs. The system subtracts the revised budget cost from the revised budget revenue to calculate the revised budget profit, and divides the revised budget profit by the revised budget revenue to calculate the revised budget percentage.
Earned Current Period Revenue, Earned Current Period Cost, Earned Current Period Profit, and Earned Current Period % | The system calculates earned revenue, cost, and profit by multiplying the percent complete by the projected final revenue, cost, and profit, respectively. The system calculates the percent by dividing the earned revenue by the earned profit.
Earned Year to Date Revenue, Earned Year to Date Cost, Earned Year to Date Profit, and Earned Year to Date % | The system calculates the earned year-to-date amounts in the same manner that it does the earned current period amounts, except that it sums the period amounts in the projected final ledger (HA) through the period specified and multiplies it by the percent complete.
Provision for Loss | The system provides, if costs are greater than revenue, the calculation of the difference as a loss and displays it in the Provision for Loss field. The system calculates the loss using the formula (1 – percent complete) × profit. For example, if the profit is –1000 and the percent complete is 60, the system calculates the amount for the provision of loss as (1 – .6) × 1000 or 400.

#### Revising Accounts in the Profit Recognition Record

Access the Account Adjustment form.

Click Find on the Account Adjustment form to display cost codes that are associated with the profit recognition record.

Show ETC Accounts(show estimate to complete accounts) | If you select this check box, the system will display only accounts with estimate to complete amounts. If you do not select this check box, the system will display all accounts.
Budget Revision +/− Amount Entry | Enter the amount that specifies whether the system increases or decreases the projected final amount. For example, to increase the budget up 50, enter 50; to decrease the budget down 50, enter –50.
Projected Final +/− Amnt Entry | Enter a value to change the projected final amount (ledger type HA) in the F0902 table for a job's cost accounts. For example, to increase the budget up 50, enter 50; to decrease the budget down 50, enter –50. You can also enter a percentage so that the system automatically calculates the amount. If you enter a percentage, which is the percent complete as it applies to cost, enter the number preceded or followed by %. For example, you can enter 20 percent as either %20 or 20%.
ETC Amount(estimated to complete amount) | Enter the amount that specifies whether the system increases or decreases the projected final amount. For example, to increase the budget up 50, enter 50; to decrease the budget down 50, enter –50. This field appears only with method of computation E. The system adds the values in this field to the actual values and updates the Projected Final (HA) ledger.

Note. You can access the Purchase Orders program (P4310) to view all the contracts that are associated with that account by selecting Subcontract Mgmt from the Row menu on the Account Adjustments form.

See Also

Creating Contracts

### Creating Profit Recognition Journal Entries

This section provides overviews of the Create Journal Entries program (R51444) and the profit recognition journal entries that the system creates using the AAIs and discusses how to:

- Create profit recognition journal entries.

- Set processing options for Create Journal Entries (R51444).

- Revise profit recognition journal entries.

- Create a job.

#### Understanding the Create Journal Entries Program

To generate the journal entries to the accounts that are used in the profit recognition process, you must run the Create Journal Entries program (R51444). The system creates journal entries to the appropriate accounts based on the information from the Profit Recognition table (F5144), which you can review using one of the job adjustments programs. When you run the R51444 program, the system:

- Creates journal entries with a document type JE and batch type G.

- Updates the Record Requires Regeneration field (G7ZFU1) in table F5144 to N.

  This prevents the system from generating journal entries more than once for the same record.

- Clears the Version field (VERS) in table F5144.

  This protects the version against changes that could otherwise be made using the job adjustment programs.

After you generate profit recognition journal entries, you must post them to update the F0902 table. If you have generated the journal entries in error, do not delete them.

When you are using the JD Edwards EnterpriseOne Homebuilder Management system, the R51444 program reads the accounts that have subledgers and retrieves the option type from the Option Master program (P44H40). The value in the Special Handling field in the option type UDC table (44H4/OT) will indicate which AAI is used to access the correct cost of sales account.

See Revising Profit Recognition Journal Entries.

See Also

Working with Batches

Posting Financial Transactions

Setting Up Options

#### Understanding the Profit Recognition Journal Entries

When you run the Create Journal Entries program (R51444), the system uses the JD Edwards EnterpriseOne Job Cost AAIs to determine the accounts to use for the debit and credit entries. Because the journal entries must balance, the system uses a pair of AAIs for each type of journal entry that it generates. This table lists each pair of AAIs that the system uses for each balancing journal entry that the system generates.

See Setting Up AAIs for Job Cost.

AAI Pair | Function of AAI and Journal Entry | Recognition Method | Debits and Credits
JCST01 and JCST02, JCST03 and JCST04, and so on. | Identify the range of cost accounts that the system uses. You can set up 49 separate ranges to identify the cost accounts that you want to use. | Not applicable | Not applicable
JCCA01 and JCCA02, JCCA03 and JCCA04, and so on. | Identify the range of revenue accounts that the system uses. You can set up 49 separate ranges to identify the revenue accounts that you want to use. | Not applicable | Not applicable
BS and IS | Transfer the amounts for the work in progress (WIP) cost and revenue from the balance sheet (item BS) to the cost of sales and revenue accounts on the income statement (item IS). | Not applicable | Dr. IS cost of sales Cr. BS WIP cost Dr. BS WIP revenue Cr. IS revenue
JCCOUA and JCBE | Record the overbilling amount, which the system calculates by subtracting the earned revenue from the actual revenue. If the actual revenue is greater than the earned revenue, the system records the difference in an overbilled revenue account and records the offset in an unearned revenue liability account. The system generates a reversing journal entry. | 1 – Cost | Dr. JCCOUA Cr. JCBE
JCBOUA and JCBE | Record the overbilling amount, which the system calculates by subtracting the earned revenue from the actual revenue. If the actual revenue is greater than the earned revenue, the system records the difference in an overbilled revenue account and records the offset in an unearned revenue liability account. The system generates a reversing journal entry. | 2 – Revenue | Dr. JCBOUA Cr. JCBE
JCCE and JCCOUA | Record the underbilling amount, which the system calculates by subtracting the earned revenue from the actual revenue. If the actual revenue is less than the earned revenue, the system records the difference in an underbilled revenue account and records the offset in an accrued revenue asset account. The system generates a reversing journal entry. | 1 – Cost | Dr. JCCE Cr. JCCOUA
JCCE and JCBOUA | Record the underbilling amount, which the system calculates by subtracting the earned revenue from the actual revenue. If the actual revenue is less than the earned revenue, the system records the difference in an underbilled revenue account and records the offset in an accrued revenue asset account. The system generates a reversing journal entry. | 2 – Revenue | Dr. JCCE Cr. JCBOUA
JCAPC and JCAPO IS and BS | Record the adjustment to the cost that was entered in the Accrual/Deferral field on the job adjustments form. If the amount entered in the field is positive, the adjustment is an accrual. Note. Because the accrual and deferral accounts are typically balance sheet accounts, the system generates an additional journal entry to move the amount from the balance sheet to the income statement. The system generates a reversing journal entry. | Not applicable | Dr. JCAPC Cr. JCAPO Dr. IS Cr. BS
JCSMI and JCSMJ IS and BS | Record the adjustment to the cost that was entered in the Accrual/Deferral field on the job adjustments form. If the amount entered in the field is negative, the adjustment is a deferral. Note. Because the accrual and deferral accounts are typically balance sheet accounts, the system generates an additional journal entry to move the amount from the balance sheet to the income statement. The system generates a reversing journal entry. | Not applicable | Dr. JCSMI Cr. JCSMJ Dr. BS Cr. IS
JCLOSS and BSLOSS or JCBE | If the projected final amount results in a loss of profit, the system records it in the provision for loss account (JCLOSS) and records the offset in BSLOSS or JCBE if BSLOSS is not set up. The system generates a reversing journal entry. | Not applicable | Dr. JCLOSS Cr. BSLOSS or JCBE.

If you force projected final costs, revenue, or profit values using one of the job adjustment programs, the system also generates one-sided journal entries to the FA ledger if the Projected Final Change Entries processing option is set to 1. The system uses these AAIs to locate the accounts to use for the journal entries:

- Force projected final costs – JCPFC.

- Force projected final revenue – JCPFR.

- Force projected final profit – JCPFP.

The system generates these journal entries for audit trail purposes only. The system automatically updates the F0902 table for the FA ledger with the amounts that you force regardless of whether you select to generate the journal entries.

#### Creating Profit Recognition Journal Entries

Select Profit Recognition (G5122), Create Journal Entries.

#### Setting Processing Options for Create Journal Entries (R51444)

Processing options enable you to specify the default processing for programs and reports.

Process

1. Projected Final Change Entries | Specify whether to create an audit trail (journal entries) when you make changes to the projected final values (cost, revenue, or profit). Values are: Blank: Do not create an audit trail. 1: Create an audit trail. The system creates the journal entry with a document type of FP.
2. Ledger Type | Specify the ledger type to assign to the journal entries that the system generates when you enter 1 in the Projected Final Change Entries processing option. Use when creating journal entries for projected final changes. If you leave this processing option blank, the system assigns ledger type FA.
3. Account Overrides | Job (Business Unit) Specify the job number to assign to the journal entries that the system generates for profit recognition. The system uses the value that you enter in this processing option in conjunction with the object (cost code) and subsidiary (cost type) accounts entered in the profit recognition AAIs. Subledger Specify the subledger to assign to the journal entries that the system generates for profit recognition. Note. The job number, subledger, and subledger type entered will override the corresponding values provided by AAIs ISXXXX, JCCOUA, JCBOUA, and JCLOSS. Subledger Type Specify the subledger type to use when overriding the account during the creation of entries for cost, revenue, over billing, and under billing on the Income Statement. Note. The job number, subledger, and subledger type entered will override the corresponding values provided by AAIs ISXXXX, JCCOUA, JCBOUA, and JCLOSS.
4. Summarize IS/BS Entries | Specify whether the system summarizes IS/BS entries. Depending on the value, the system will either generate the full detail with multiple lines of journal entries for each account or summarize the journal entries into one IS and one BS transaction per account number.

#### Revising Profit Recognition Journal Entries

If you generate the journal entries in error, or discover that you need to make revisions, do not delete the unposted journal entry. Instead, do one of the following procedures:

- Post the journal entry, make the necessary revisions, and rerun the Profit Recognition Build program for the same period.

  The system recalculates the profit information based on the changes that you make and generates journal entries for those incremental changes only.

- Post the journal entry, void it, post the void, make the necessary revisions, and then rerun Profit Recognition Build for the same period.

  The system regenerates a new set of journal entries.

See Also

Revising and Voiding Posted Journal Entries

#### Closing a Job

After the job is complete and the accounting transactions for the job have been generated and updated, you can close the job. When you close the job, you cannot enter any transactional information including journal entries. To close the job, access the Job Master Revisions form and update the Posting Edit field on the job to N.

Select Profit Recognition (G5122), Open/Close Job (Job Master).

See Also

Setting Up Job Master Records