About recognition of deferrals in previous periods

For documents (such as customer ledger invoices and cash sales) that require revenue recognition in previous periods, you can use deferral codes with the Flexible by periods, prorate by days, or Flexible by days in period recognition method specified and the Allow recognition in previous periods field selected.
When these deferral codes are specified in a document line, the additional Term start date and Term end date columns appear in the table on the Document details tab in the document entry window, such as Sales invoices (AR301000).

In these columns, you can define the required start date and end date of the recognition process for each document line with such a deferral code specified.
The period of the recognition start date can be earlier than the period of the document date.
As a result, the system generates a recognition schedule starting with the financial period that corresponds to the date specified in the Term start date field.

For recognising expenses as well as revenues in the periods that differ from the financial period of the document date, you can configure a deferral code with one of the following recognition methods specified: Evenly by periods, Evenly by periods, prorate by days, Evenly by days in period, or On payment.

With these methods specified, you can set up the start recognition period to be either earlier than the period of the document date, or later than the period of the document date.

To define the start recognition period, you need to specify the Start offset parameter while you configure a deferral code.
This parameter defines the number of periods between the period of the document date and the start recognition period or the period when recognition process starts.
If you specify a negative value in this field (for example, –1), the recognition period will start one period earlier than the period of the document date.
If you specify a positive value in this field (for example, 1), the recognition will start one period later than the period of the document date.

You can assign a deferral code to a needed non-stock item on the Deferral settings tab in the Non-stock items (IN202000) window, so that when you enter that non-stock item in a detail line of a document, the system inserts the deferral code in the Deferral code column of that line.
If a deferral code is not assigned to a non-stock item, or if you want to override the deferral code that is filled in by the system, you can select a required one in the Deferral code column in each required line when you enter a document.

When such a document is released, the system will generate a particular recognition schedule for each line of a document that contains a deferral code.

Once you have released a document that requires deferrals, the system generates an appropriate deferral schedule.
This schedule contains the list of recognition transactions, each of which needs to be posted to a particular financial period.
To release and post these recognition transactions, you need to run the recognition process in the Run recognition (DR501000) window manually.

In the Run recognition (DR501000) window, you select the required date and deferral code and, in the table, the transaction to be posted.
Note that each time you run the recognition process, only one recognition transaction is released, even if multiple transactions are due according to the appropriate schedule.

The recognition transactions can be released and posted to open financial periods only.
To post recognition transactions to closed financial periods, you need to select the Allow posting to closed periods field in the General ledger preferences (GL102000) window.