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Administrator Guide
Last Updated: 2023-09-08
Steps: Reclassify Customer Contract Assets and Liabilities

Steps: Reclassify Customer Contract Assets and Liabilities

Review setup considerations for period end revenue accounting.
You can configure Workday to manage your period end accounting to adjust deferred revenue balances to zero when your company has:
  • Deferred and accrued revenue adjustments deriving from multiple-element arrangements with revenue allocations.
  • Foreign exchange gain or loss adjustments deriving from foreign currency customer contracts.
When you run period end accounting, Workday creates an operational journal:
  • In the selected period.
  • Reversal at the beginning of the next period.
Workday doesn't calculate or post accruals or reversals that relate to linked contracts or prepaid schedules.
  1. (Optional) Access the
    Edit Tenant Setup - Financials
     task.
    Select the
    Include Closed Revenue Recognition Installments in Period-End Revenue Accounting
     check box to include closed revenue recognition installments in the total revenue recognized amount calculation.
    Security:
    Set Up: Tenant Setup - Financials
     in the System functional area.
  2. Select:
    1. Reclassification
       from the
      Dimension
       prompt.
    2. Customer Contract Asset and Liability
       from the
      Values
       prompt for these ledger accounts:
      • Deferred Revenue
      • Unbilled Receivables
  3. Access the
    Maintain Journal Source Mapping to Operational Transactions
     task.
    To post operational journals, select
    Customer Contract Asset and Liability Reclassification
     from the
    Customer Contract Asset and Liability Reclassification Journal Entry Source
     prompt.
    Security:
    • Set Up: Journal Source
       domain in the Common Financial Management functional area.
    • Set Up: Payroll - Company Specific (Accounting)
       domain in the Core Payroll functional area.
  4. When you use worktag balancing, select an option from the
    Default Worktag for Customer Contract Asset and Liability Reclassification
     prompt to balance your operational journals.
    Carve in/carve out adjustment tasks don't support worktag balancing.
  5. Add at least 1 contract line with an
    Accrued
     or
    Deferred
     revenue treatment.
  6. (Optional) Access the
    Maintain Schedule Types
     task.
    When you want to create a consolidated billing schedule, enable consolidated billing for a schedule type.
    Security:
    Set Up: Customer Contracts - Templates and Types
     domain in the Customer Contracts and Project Billing functional areas.
  10. Access the
    Create Revenue Recognition Accounting
     task.
    Create accounting for the relevant revenue recognition installments.
    Configure the
    Revenue Recognition Installment Event
     business process and security policy in the Customer Contracts and Project Billing functional areas.
  11. (Optional) Access 1 of these tasks to reclassify deferred revenue balances for customer contracts that have multiple-element revenue allocation:
    • Create Carve In/Carve Out Adjustment Journal
    • Schedule Carve In/Carve Out Adjustment Journal
    Workday creates an operational journal to post the reclassification using the dimensions that you configure in the account posting rules. Example: For the Deferred Revenue and Unbilled Receivables account posting rules, you can configure Customer Group, Project Hierarchy, custom organization, and custom worktag dimensions.
    Configure the
    Carve In Carve Out or Foreign Currency Adjustment Journal Event
     business process and security policy in the Customer Contracts and Project Billing functional areas.
  12. (Optional) Access the
    Create Customer Contract Foreign Currency Adjustment Rule
     task.
    Define account posting rules and worktags for foreign currency adjustments.
    Security:
    Set Up: Revenue - Adjustments
     domain in the Customer Contracts and Project Billing functional areas.
  13. (Optional) Access 1 of these tasks to calculate the difference between your billing and revenue recognition based on transaction periods and exchange rates:
    • Create Customer Contract Foreign Currency Adjustment Journal
    • Schedule Customer Contract Foreign Currency Adjustment Journal
    Workday creates an operational journal based on the foreign currency rules that you define for your adjustments. You can also configure dimensions in the account posting rules for Workday to use when creating operational journals. Example: For the Deferred Revenue and Unbilled Receivables account posting rules, you can configure Customer Group, Project Hierarchy, custom organization, and custom worktag dimensions.
    When there's a prepaid balance in base currency after you fully apply prepaid amounts due to the exchange rate differences between your prepaid invoice and the consumption invoices, Workday adjusts the amount when you complete 1 of the tasks. Workday only adjusts amounts for:
    • Customer contracts with prepaid line types.
    • Prepaid lines on consolidated billing schedules.
    Configure the
    Carve In Carve Out or Foreign Currency Adjustment Journal Event
     business process and security policy in the Customer Contracts and Project Billing functional areas.
  14. Access 1 of these tasks to create asset and liability reclassification journals:
    • Create Customer Contract Asset and Liability Reclassification Journal
    • Schedule Customer Contract Asset and Liability Reclassification Journal
    Configure the
    Customer Contract Asset and Liability Reclassification Journal Event
     business process and security policy in the Customer Contracts and Project Billing functional areas.
Workday uses the revenue treatment and account posting rules to debit or credit your
Deferred Revenue
 and
Unbilled Receivables
 ledger accounts.
Use these reports to view your reclassification journals:
  • Find Journals
  • Find Customer Contract Asset and Liability Reclassification Journals