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COGS and Deferred COGS in Oracle R12

The document explains the new Deferred COGS feature in Oracle R12, which ensures that Cost of Goods Sold (COGS) is recognized only when the corresponding revenue is recognized, maintaining synchronization between the two. It outlines the setup process, including creating sales orders and running various programs to manage revenue recognition and COGS events. The document also provides step-by-step instructions for verifying transactions and accounts related to deferred COGS.

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180 views8 pages

COGS and Deferred COGS in Oracle R12

The document explains the new Deferred COGS feature in Oracle R12, which ensures that Cost of Goods Sold (COGS) is recognized only when the corresponding revenue is recognized, maintaining synchronization between the two. It outlines the setup process, including creating sales orders and running various programs to manage revenue recognition and COGS events. The document also provides step-by-step instructions for verifying transactions and accounts related to deferred COGS.

Uploaded by

ThatERPGuy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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COGS and Deferred COGS In Oracle R12

The deferred COGS account is the new feature introduced in Release 12. The key fundamental behind the
feature is that the COGS is now directly matched to the Revenue. In simple terms, this means, COGS for an
order line will be recognized only if the revenue is recognized for that line making sure that the revenue and
COGS are posted in the same month. Matching percentage is also taken care which ensures that revenue and
cost are always in sync.

SETUP > Inventory Resp > Setup > Organization > Parameters > Other Accounts

Here Enter Deferred COGS Account

STEP:
==========

1. Create Sales Order and do Pick Confirm


2. Complete Shipping Confirm Process and run interface trip stop Program.

Below two Accounts Will hit.

Cr > Inventory Valuation accoun


Dr > Deferred COGS Accoun

Go To Inventory responsibility and Review the Accounts in Material Transactions form.


3. Run Workflow Background Process and AutoInvoice Master Program to Create Invoice in AR.

Now AR invoice Got Created, But Revenue not yet Recognized.

Go To AR Resp > Control > Accounting And Search with Sales Order Number.

Revenue Not Yet Recognized.


4. Recognize the revenue in AR.

NAV > Accounts Receivables Resp > Control > Run "Revenue Recognition" Program.

After running the program, again check for Revenue.


5. Now we have to accept the Revenue.

Click on "Manage Revenue".


6. Run Below Set Of Concurrent Programs.

Record Order Management Transactions: records new sales order transaction activity such as
shipments and RMA returns in Oracle Order Management.

Collect Revenue Recognition Information: determines the percentage of recognized or earned


revenue related to invoiced sales order shipment lines in Oracle Receivables.

Generate COGS Recognition Events: creates and costs COGS recognition events for new sales
order shipments/returns and changes in revenue recognition and credits for invoiced sales order
shipment lines.

After Running ABove Programs, Verify "Material Transaction" Form. A non-physical


transaction has been generated Transaction Type= COGS Recognition
Click on "Distributions" Button and verify Accounts.

Deffered COGS : Credit


COGS : Debit.

From <http://oracler12scmfunctional.blogspot.com/2015/09/cogs-and-deferred-cogs-in-oracle-r12.html>

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