Bramasol RAR

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    1/21/2016

    TheNew

    Deferred

    Accounting

    Standards

    RARInAction

    Ourspeakerstoday:

    ChrisRitterhern

    HansChristianMetz

    JohnFroelich

    January 21, 2016

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    Haveaquestion?

    Submit

    it

    in

    the

    GotoWebinar

    Q&A

    box

    Thiswebinarwillberecorded

    Feedback? SurveywillbeavailableattheendoftheWebinar

    Slides,availableinthewebinarHandouts boxnow.

    Howtoengagewithusduringthiswebinar

    Followus:

    Twitter:@Bramasol

    www.bramasol.com

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    Welcome Todays Speakers

    30+ yrs Business Systems experience 25+ yrs. Focused on Finance &

    Operations Solutions

    10+ Years at [email protected]

    CHRIS RITTERHERN

    DIRECTOR SOLUTION ARCHETICT

    Hans Picture

    15+ years managing complex integration of accountingand SAP ERP

    [email protected]

    HANS-CHRISTIAN METZ

    SR. LEAD CONSULTANT & ARCHITECT

    OurModeratortoday:

    JohnFroelich

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    Whowe

    are

    Background StrategicSAPRevRecConsultingPartner

    SAPGold

    Partner

    founded

    in

    1996

    as

    the

    firstChannelPartnerinNorthAmerica

    100+ConsultantswithanAverageof10+

    yearsofexperience

    SupportandAMS ServicesandSupportExperts

    SAPCertifiedPCOESupport-(24x7AMS&SupportCoverage)

    Supportfor

    ECC,

    S/4HANA,

    and

    Analytics

    Vision ThoughtLeaderswithtightIntegrationtoSAP

    TheLeaders

    in

    SAP

    Revenue

    Recognition

    75%ofSAP1.0RampUps

    TightLinkagestoSAPDevelopment

    NumerousPOCs,workshopsandconsulting

    projects

    Transformation FocusedonOfficeoftheCFOSolutions

    TrustedSAPRampupCoaches

    TestingofRevenueAccountingSoftware

    Workingdirectly

    with

    Revenue

    Recognition

    DevelopmentinGermany

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    #1HowRAROperates

    #2The

    new

    before

    &

    after

    businessprocess

    #3Benefits

    to

    your

    company

    RevenueRecognition

    Whatyouwillsee?Revenue

    Recognition

    Whatyouwillsee?

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    #1HardwarewithService&Subscription

    #2

    Intellectualproperty

    with

    auto

    generated

    billing

    lines

    TodayYouWillSeeTwoScenariosTodayYouWillSeeTwoScenarios

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    Akeymessage

    Todaywedlikeyoutoseetheimpact

    of

    RAR

    In

    Action

    &

    how

    it

    helps

    your

    business

    Todaywedlikeyoutoseetheimpact

    of

    RAR

    In

    Action

    &

    how

    it

    helps

    your

    business

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    Revenueisrecognizedwhenacustomerobtainscontrolofa

    goodorservice.

    Acustomerobtainscontrolwhentheyhavetheabilityto

    directtheuseofand/orobtainthebenefitsfromthegoodor

    service.

    WhatisRevenueRecognition?WhatisRevenueRecognition?

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    NEWRevenue

    Recognition

    Accounting

    and

    Reporting

    AffectingAllRevenueContracts(IFRS15,FAS201409)

    FinalstandardpublishedMay2014

    Effectivedatelatest2018/9*(earlyadoptionpossibleforIFRSpreparers)

    Newsingleprincipled5stepmodel

    (SSP)forrecognizingrevenue

    - Disclosurechanges

    include

    both

    quantitative

    andqualitativeinformationabouttheamount,

    timing,anduncertaintyofrevenuefrom

    contractswithcustomersandthesignificant

    judgmentsused

    Allcompanies(publicandprivate)willberequiredto

    preparetheir

    revenue

    contracts

    now

    to

    comply

    with

    thisnewregulationby2018/9*

    1 Identify the contract with the customer

    2 Identify the separate performanceobligations in the contract

    3 Determine the transaction price

    4 Allocate the transaction price to theseparate performance obligations in thecontract

    5 Recognize revenue when (or as) a performanceobligation is satisfied

    *The revenue standard will be effective for annual reporting periods beginning on or after January 1, 2017. Early

    application will be permitted in IFRS countries. On April 1, 2015, FASB proposed to delay the effective date by 1

    year to 2018 and permit early adoption under US GAAP. The IASB followed on April 29.

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    WhatisaPOB?

    POB

    Defined:

    Underthenewregulation,ASC606,a

    performanceobligationisdefinedasapromise

    totransfer

    agood

    or

    service.

    Aperformanceobligationissomethingthatcan

    beexplicitlystatedinthecontractoritcanbe

    implied.

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    Scenario1Our

    Product

    Sell

    Scenario

    Today

    Item (aka Material) SSP% of

    BundleRSP

    SSP for Media Device when purchased on it's own $200.00 62.50% $124.38

    SSP for Media Service at $20 per month at six months (price

    when purchased alone & not part of a bundle or a deal)$120.00 37.50% $74.63

    Total $320.00 100.00% $199.00

    Recognized monthly subscription is $74.63/ 6 months: $12.44

    RARVersion1.1beingused

    inour

    AWS

    Demo

    &

    POC

    Cloudenvironment

    RSPRelativeSellingPrice

    Selling an inclusive 'Media Device' .

    'Deal'includes the first six months of subscription which usually

    cost $20 per month.

    $199.00

    This means, that from a revenue recognition perspective, we

    recognize a) The actual value of the Media Device, in this case

    when activated

    b) The value of the Media Device is subtracted from $199

    and the reminder is divided across 6 months and then

    recognized on a time basis

    Breakdown o f that statement (by our convention):

    End Media Device value for this 'deal'

    ($199 less subscription costs) $109.00

    Final Media Service monthly value ($15 times 6 months) $90.00

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    FlowDiagram

    Transaction

    Layer

    to

    RAR

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    SAP ECC

    ver 6.0

    EHP 7

    SAP RAR

    ver 1.1

    BramasolsDemo

    Environment

    AWS

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    SowhatdoesSAPRevenueAccountingLookLike

    Scenario1HardwarewithService&Subscription

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    Letstakeacloserlookatsomeofthe

    numbers&screensthatwentbyduringour

    livedemo..

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    TransactionalSales

    Contract:

    Deviceincludes6

    monthsofservice

    subscription,whichis

    valuedat

    $15/month

    if

    purchasedonitsown

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    Utilizingthe

    Auto

    generated

    Installment

    Plan

    in

    SAP

    Monthlysubscription

    autogeneratedeach

    onebecomes

    aPOB

    Contractsubscription

    start/stopdates

    BTW: Contractcanbe

    lateramended&will

    auto

    update

    RAR

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    TransactionSystem

    Items

    to

    Transfer

    to

    RAR

    Deviceplus

    6months

    ofsubscription

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    RARContract

    Created

    both

    IFRS

    &

    GAAP

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    RARContract

    Revenue

    Picture

    Before

    Activation

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    RARContract

    Revenue

    Picture

    After

    Activation

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    RARPostingbackto

    Transactionsystem

    ThenaRARsystemposting

    runmakesthefollowing

    adjustmentsautomatically

    backtotheTransaction

    systemGeneralLedger

    TransactionSystem

    General

    Ledger

    Posting

    Results

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    RARMirror Contract

    By

    POB

    Type

    Media Device

    Monthly Subscription

    Media Device Monthly Subscription

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    ReconciliationAudit

    Revenue

    and

    G/L

    Userscanlookbackandeasilyauditpostingissuesusingvarietyofcriteria

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    SAPRevenueAccountinginAction.

    Scenario2

    Intellectualpropertywithautogeneratedbillinglines

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    Scenario2 Intellectual

    property

    with

    auto

    generated

    billing

    lines

    Inthisscenario,itwasagreed,byconventionthatmultipletermsforthe

    sametitlewouldberepresentedontheirowncontractline.

    Thisalsoallowedforlatereaseofchangeonshowdates&durationduring

    theparticularviewingseason

    Line Item# Item DescriptionTerm

    Start

    Term

    End

    Term

    Months

    Accounting

    Basis RuleLi