Event Short-Term Reclassification Processing

Modules > Advanced revenue & expense deferrals > Periodic tasks > Event short-term recalculation processing

Use this page to manually make periodic adjustments to the short-term deferral account for event-based deferral schedules that use the one of the short-term deferral functionality with the unbilled revenue feature and have a deferral method of rolling periods or fixed year.

Adjustments to the deferral schedule are based on the invoice date (for sales orders) or the initial journal entry transaction date (for billing schedules that use the unbilled revenue feature).

Short-term adjustments automatically occur if any of the following are true: 

• The deferral schedule is created with events that have deferral end dates within the short-term, depending on the short-term adjustment method selected.
• The deferral schedule is modified and the deferral end date on an event line is modified.
• The total contract amount (for unbilled revenue) is modified.

Note: Short-term adjustments do not occur when the deferral end date for a line is empty. These amounts belong to the long-term account.

Consider the following, a billing schedule has an event-based deferral item with two events: 

Line	Description	Deferral end date	Amount
1	Event 2	September 30, 2020	7200.00
2	Event 1	March 31, 2021	4800.00

The initial journal entry for the billing schedule is created on June 16, 2021. The short-term adjustment method is fixed year.

Based on the date of the initial journal entry, Line 1 (Event 2) with a deferral end date of September 30, 2020 is within the fiscal year. As a result, the amount for Line 1 belongs to the short-term account. Line 2 (Event 1) has a deferral end date that is beyond the fiscal year. As a result, the amount for line 2 belongs to the long-term account.

Example

Consider the following example: A company sells conference events to its customers. Most of the time, the date of the conference is known and for 20% events is unknown. Once the sale is made, the revenue amount is deferred and will be recognized in the month of the conference.

The company year-end is December 31, 2020.

Each sales line/invoice has multiple events:

Invoice Date	Event	Amount	Deferral End Date
March 05, 2020	Line 1. October Conference	500.00	October 11, 2020
March 05, 2020	Line 2. Customer Appreciation Event	700.00	TBD
		Short-term: 500.00 (Deferral end date is within the fiscal year) Long-term: 700.00 (unknown deferral end date)
April 23, 2020	Line 1. October Conference	800.00	October 11, 2020
April 23, 2020	Line 2 Summit	1000.00	September 12, 2021
		Short-term: 800.00 (Deferral end date is within the fiscal year) Long-term: 1000.00 (deferral end date is past the fiscal year)

Lines that do not have a deferral end date are considered long-term. When deferral end dates are updated on the Modify Schedule page, the short-term amount is immediately adjusted and the journal entry can be viewed from the audit trail.

Invoice Journal Entry

All invoices created use the long-term deferred revenue General Ledger accounts: 

Rolling Periods

• The end date for the Customer Appreciation Event is unknown, the revenue amount (700.00) will remain in the long-term deferred revenue account.
• For the October Conference, the deferral end date is within 12 months from the invoice date. The reclassification journal entry will be created at the time the invoice is posted:

• The Summit event deferral end date is one-year into the future (September 12,2021). That amount will remain on the long-term revenue deferral. When the reclassification process is run anytime after September 12,2021, the short-term and long-term amounts are adjusted: 

• In September, the date of the Customer Appreciation event is to be on November 12, 2020. The event end date is updated and the reclassification process is run within 12 months of the event. The following reclassification journal entries are created: 

Year End

The revenue for the Summit event is recognized in September. Reclassification is not needed, and a revenue recognition journal entry that uses the short-term deferred revenue account is used: 

Reclassify Deferral Schedules

The reclassification process for an event-based deferral schedule is run automatically or manually based on whether the deferral end date and expiration date are known in advance.

The reclassification process is automatically run after the event-based deferral schedule is created, in the following situations: 

• When the deferral end date or expiration date is known in advance, a process is automatically run to calculate whether the event amounts need to be reclassified to a short-term account based on the short-term deferral method for the deferral schedule.
• When the deferral end date or expiration date is not known in advance, and is later specified with a date that is within 12 months of the current date, a short-term a short-term adjustment is automatically created.

The reclassification process must be manually run after the event-based deferral schedule is created, in the following situation: 

• When the deferral end date or expiration date is not known in advance, and is later specified with a date that is more than 12 months in to the future, the short-term reclassification processing task must be manually run to create the short-term reclassification entry.

To manually run the short-term reclassification process, follow these steps: 

1. Specify the Transaction date and the Reclassification date.

The Reclassification date is the date used to determine if the event amount should be moved from long-term to short-term.

2. To further restrict the records that appear in the line grid, select Select to add other criteria to restrict the records you want to process.
3. Select any records that you do not want to reclassify, and select Remove.
4. Select OK.

The result of this process is a short-term reclassification entry for the event deferral schedules processed.

Note: As a best practice, run the reclassification process once a month to ensure that the balance of your short-term and long-term accounts is accurate.

Fields

This page contains the following fields: 

Field	Description
Header
Transaction date	Specify the date on which the adjustment journal entry is to be processed. The default date is the current date.
Reclassification date	Specify the date on which the reclassification is to be processed. Required. The default date is the current date.
Name	Displays the default journal entry name. Read-only. This value is specified on the Advanced Revenue & Expense Deferrals Parameters.
Description	Displays the description of the journal entry name. Read-only.
Deferral schedules
Displays all the deferral schedules that match the specified criteria. The deferral schedules in the list must have a long-term balance that is within a year of the specified recalculation date (depending on whether the short-term unbilled method is rolling period or fixed year). If one or more lines in the deferral schedule has a deferral end date, the deferral schedule appears in this list. The list shows the following columns: Deferral schedule number Transaction type Recognition type Short-term deferral amount Deferral account Deferral amount Long-term deferred Short-term deferred
Schedule lines
Displays the lines for the deferral schedule selected in the previous list. This list is for informational purposes only. Only the lines that have a deferral end date appear in the list. The list shows the following columns: Line Description Deferral end date Recognized Stubbed Amount

Buttons

This page contains the following buttons: 

Button	Description
Select	Opens the query dialog where you add more filters to retrieve only the records that you want to process.
OK	Processes the reclassification for the deferral schedule lines. The journal entry created is summarized based on the Summarize recognition journal setting on the Advanced Revenue & Expense Deferrals Parameters.
Cancel	Cancels the process, and closes the page.