SAP - Service Entry Sheet For Asset Acquisition 1672

  • In a SAP environment, we are trying to mimic or simulate Three Way Matching Invoice verification, but for what in reality is a Down Payment, for Asset Acquisition, paid for under a Percentage Of Completion basis. We are wondering if Service Entry Sheet Functionality would be proper for such a scenario. Someone in the organization would - once a percentage milestone is reached - enter the ‘service’ as received to authorize payment.
    More specifically, we are wondering what the drawbacks from such an approach could be. Or, alternatively, if someone knows of functionality that could accomplish an Invoice Verification Process of sorts, when we are disbursing based on a calendar schedule, or other criteria not related to the receipt of physical goods.
    We are also wondering what issues or objections could be raised if we decided to implement such an approach, be them regulatory, legal, procedural, etc.
    Any comments ANY, good or bad for or against the above approach are more than welcome.
    Thanks in advance,

  • Hi,
    I recall from advanced accounting that percentage of completion of an acceptable method for GAAP purposes when used for revenue recognition in the construction industry.
    However, when use to recognize partial receipt of goods, I am not sure that this method is acceptable or is considered GAAP. I believe that GAAP places emphasis on the transfer of title and one typically considers the shipping method when making this determination.
    Generally, revenue can only be recognized when earned and the standard revenue recognition tests are satisfied. Expenses must be recognized in the period in which the service are rendered. Recognizing receipt of an asset in connection with a partial payment (down payment) does not seem to be compliant with GAAP since the asset is not received. In fact, if the asset is destroyed in transit and the shipping method is FOB Destination, one could successfully claim a refund for the down payment since title has not yet passed.
    I hope this helps and please ‘repost’ if you still need specific details about using SAP in this manner for asset receipts. I’m sure someone reading the Forums has experienced a similar situation.

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