Revenue management kpmg_oracle

1. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Oracle’s Initial Response to
Topic 606 & IFRS 15,
Revenue from Contracts with Customers
Stephen Thompson, KPMG
Seamus Moran, Oracle Financials Development

2. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Content
Steve Thompson will discuss compliance with the standard and issues in
transitioning to it.
Seamus Moran will discuss Oracle’s product response
Fusion Revenue Management
Fusion & eBusiness Suite
Peoplesoft Contracts
JD Edwards Contracts

3. WE HELP
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THEY SAY
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is here
The New US GAAP
and IFRS Revenue
Recognition Standard
Stephen Thompson

4. © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 292510
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– Replaces all current rules, including industry and transaction-specific standards
– Converges US GAAP and IFRS revenue recognition practices
– Principles-based standard will require more judgment in reaching conclusions
– Greater use of estimates
– Complex transition requirements
NEW REVENUE RECOGNITION RULES
Effective date for public entities
with December 31 year ends.
Nonpublic entities have a one
year deferral in effective date.
201820162013 2014 20172015
January 1st
Retrospective
transition
application date
January 1st
Effective date
May 28, 2014
Final standard

5. © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 292510
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WE HELP
you realize its
potential
THEY SAY
the future
is here
●
Sweeping changes in the way revenue is recognized by companies…
●
New information requirements requiring significant system and process changes…
●
Opportunity to reevaluate accounting policies, processes, systems and technology …to achieve improvement in all
aspects of the revenue cycle, drive efficiencies and increase value add to the business…
Opportunity to achieve
improvement in all
aspects of the revenue
cycle to drive efficiencies
and increase value add
to the business…
Accounting Changes
Financial and Operations
Process Changes
Revenue Recognition Automation
and ERP Upgrades
Governance and Change
NEW REVENUE RECOGNITION RULES, NOT ONLY A CHALLENGE
BUT ALSO AN OPPORTUNITY…

6. © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 292510
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WE HELP
you realize its
potential
THEY SAY
the future
is here
Business
■ Impact on business practices
■ Budget and management reporting
■ Communication with financial markets
■ Covenant compliance
■ Opportunity to rethink business practice
■ Coordination with other strategic initiatives
Systems and Processes
■ Impact on ERP system
■ General ledger, subledgers and reporting packages
■ Supporting transition process
■ New processes
■ SOX compliance
●
Change Management
●
Project management
●
Impact on internal resources
■ Training (accounting, sales, etc.)
■ Revenue change management team
■ Multi-national locations
Accounting, Tax, and Reporting
■ Accounting policies
■ Historical results and transition
■ Reporting differences
■ Disclosure of expected impact
■ Tax reporting
■ Tax planning
For many companies, implementation of the new revenue recognition standard is more than an accounting
exercise, as many different groups will need to be involved.
BROAD-BASED ORGANIZATIONAL IMPACT
Revenue
Recognition

7. © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 292510
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WE HELP
you realize its
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THEY SAY
the future
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EXAMPLE REVENUE RECOGNITION CHANGES
Existing Standards New Standard
100+ sources for revenue guidance 1 standard for all arrangements, all industries
Must have “persuasive evidence” of arrangement Must have “legally binding” arrangement
Fees must be fixed & determinable Fees are estimated if sufficient history exists
No recognition of contingent revenue No similar prohibition; subject to estimation
Unit of account based on “standalone value” Unit of account based on “distinct”
No rules on accounting for modifications Modification rules can result in complicated acctg.
Software industry held to higher standard (“VSOE”) Software guidance eliminated
IP license recognized upfront or ratable based on practice IP license subject to specific rules on how to recognize
Capitalizing contract acquisition costs optional Capitalizing contract acquisition costs required
Revenue disclosures limited to policy discussion Extensive disclosures required

8. © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 292510
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THEY SAY
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CHOICE OF TRANSITION METHOD IMPACTS IMPLEMENTATION
Evaluate Existing Contracts for
Cumulative Effect Adjustment
Timeline is based on requirements applicable to a public entity with December 31 year end. Nonpublic entities
may defer application of standard for one year beyond public entity effective date.
2012 and prior 2013 2014 2015 2016 2017 2018 and beyond
CumulativeEffect
Method
Retrospective
Method
Maintain Existing Systems and Processes for Legacy GAAP Reporting Dual reporting
capability
Dual reporting capability
Evaluate Existing Contracts for
Cumulative Effect Adjustment
Maintain New Systems and Processes
Maintain New Systems and Processes
Maintain Existing Systems and Processes for Legacy GAAP Reporting

9. © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 292510
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THEY SAY
the future
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ALLOCATING TRANSACTION PRICES: SYSTEM CONSIDERATIONS
We are seeing many companies who have not already automated
revenue allocation looking to use this as an opportunity to fix that
Automation of multiple element accounting
●
Address manually (Excel ®, other)
●
Address with bolt-on third party revenue accounting automation tools
Historical approach:
Opportunity

10. © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 292510
10
WE HELP
you realize its
potential
THEY SAY
the future
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Before designing the right system solution, an assessment needs to be performed; best practice approach is as follows:
ASSESSMENT ACTIVITIES
Accounting diagnostic
Technology and Broader Impact
Evaluation
Process and information gap
analysis
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6
Transition Option Assessment
●
Accounting policy
●
Disclosure
requirements
●
Contract reviews
Accounting
Diagnostic
●
Identify information
requirements
●
Identify information
and process gaps
●
Map to existing
sources
Process and
information gap
analysis
●
Identify potential
impact on IT, tax ,
controls, ops, FP&A,
investor relations,
etc.
Technology and
Broader Impacts
●
Determine potential
impact of each
option to financials
and business
●
Assess readiness to
elect each transition
option
Transition Option
Assessment
Illustrative timeline for assessment phase:

11. © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 292510
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WE HELP
you realize its
potential
THEY SAY
the future
is here
IMPLEMENTATION TIMELINE
Potential Scenarios:
Low impact
Moderate impact
High impact
Retrospective adopterKey:  Acctg. Assessment  Implementation  Design  Implement  Sustain
Roadmap
Assess ImplementDesign Sustain
“Business
as usual”
2014 2015 2016 2017
Optional retrospective
reporting period
Timeline intended to be illustrative only.
Preparation of a timeline for a specific company will require making
educated decisions based on specific facts and circumstances.
May 28, 2014: New revenue recognition
standard issued
Effective date for public calendar
year company

12. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Oracle Product Response
Seamus Moran, Financials Development

13. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Safe Harbor Statement
The following is intended to outline our general product direction. It is intended for
information purposes only, and may not be incorporated into any contract. It is not a
commitment to deliver any material, code, or functionality, and should not be relied
upon in making purchasing decisions. The development, release, and timing of any
features or functionality described for Oracle’s products remains at the sole discretion of
Oracle.

14. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Oracle’s Product Response for Topic 606 & IFRS 15
Topic 606 and IFRS 15 Requirements & Objective
Fusion Revenue Management Footprint & Features
Transition Arrangements
Peoplesoft & JD Edwards
Where we are on the timeline
1
2
3
4
5

15. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Fusion Revenue Management Cloud Service
Generally
Available
Release 8
(US GAAP)
Revenue
Management
21 Customers
provided
development and
design feedback
Over 1,000
hours testing
7 Usability
sessions
Week Long
validation session

16. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |

17. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Understanding the Standard: Old versus New
Mandate: Don’t recognize Revenue until all delivered Mandate: Recognize Revenue once performed
Deferred
Revenue is a
sales invoice
you are
feeding to
the P&L
Contract
Liability is a
performance
obligation
you have not
delivered on
UBR are
receivables
you haven’t
billed yet
Contract
Assets
are not
Receivables,
and you
might even
have
billed
already
Revenue and
Deferred
Revenue are
valued at
invoice value
Plus or minus
Carve-ins and
carve outs
Revenue and
Contract
Balances are
valued at
Performance
Obligation
value per Step
Four
VSOE, TPE, Estimate = Fair Value OSSP, ESP = Expected Consideration
Multiple Element
Arrangement
Contract
With Customers
Elements
Units of Account
Distinct
Performance
Obligations
The
Constrain
t
Revenue
Schedule
Performanc
e
Satisfaction
Specific USA
Industries
All Commercial
Customers
Bill, then defer Four steps to valuation, then book that
Follow the
carve out
Follow
Customer
satisfaction

18. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Scope – Topic 606 & IFRS 15
• Topic 606/IFRS 15
compliance
• Billing and revenue
reconciliation
• Open Obligations
• Unaccounted
• Liabilities
• Assets
Reporting
1. Identify
Contracts with
Customers from
multiple sources
2. Identify
Performance
Obligations
Obligations
3. Calculate Transaction
Price
4. Allocate Transaction
Price to Obligations
•. Establish SSPs & ESPs
•. Relative Allocation
Revenue Value
5. Recognize Revenue
•. At Performance
Obligation Valuation
•. Contract Liabilities
•. Contract Assets
•. Transfer/satisfaction
•. Satisfaction forecast
•. Related Accounting
Revenue
Recognition

19. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Fusion Revenue Management Outline: A Framework
Sources for Performance
Obligations
Fusion Revenue Management Output &
Accounting
Order Management (OM)
Provide
Contract,
Satisfaction,
Billing,
Customer,
Product
& other
relevant
data
1. Identify Contracts with
Customers over different source
data
2. Identify performance obligations,
categorize as performed or not
3. Value the Contracts
4. Value the Performance
Obligations using relative SSP,
ESP, etc.
5. Record Revenue, Contract
Liabilities and Contract Assets
using Performance Obligations
and their valuations.
Reporting:
• Contract &
Obligation
Reporting
• Revenue, Billing &
Obligation
Reconciliation
• Performance
forecast
Account Receivables (AR)
Project Management (PA)
Contracts
Pricing
Advanced Pricing
CRM
Shipping
Support Accounting:
• Publish data to
accounting engines
(eg SLA)
• Activity and
Balances
Other Products
Custom, Excel, Non-Oracle
et cetera

20. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Fusion Revenue Management Overview
Business Scenario
Software License
Support
Consulting
Software License
Support
Consulting
Transaction
Price
100
20
80
200
Customer Bill
Software License
Support
Consulting
Transaction
Total
100
20
80
200
Performance Obligations
Invoice
Revenue
Values
OSSP/ESP
98
26
76
200
Software License
Support
Consulting
Total
98.00
8.66
16.00
28.67
Performance Satisfaction Forecast
Period I Period II
0.00
8.67
20.00
122.66 48.67
Period III
0.00
8.67
40.00

21. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
The 5 Steps are the Data Capture - Revenue Accounting is
based on Performance Obligation ID & Valuation
Search through
“order lines”
from many
sources & Link
ID distinct
performance
obligation from
“order lines”
Establish linked
transaction
price &
constraint
Apply relative
observed SSP
or ESP
Revenue Bookkeeping
Source Detail
Contract
ID
Performance
Obligation
Amount
To Bill
Revenue
Amount
PO Xfr
(from) / to
PA Performance obligation 1000
1000-10
-
4,000 (1,000)
OM Performance obligation 1000 5,000
Alien Performance obligation 1000 1000-20 1,000 2,000 1,000
OM Performance obligation 1100 1100-30 3,000 2,800 (200)
Excel Performance obligation 1100 1100-40 2,500 2,700 200
PA Performance obligation 1100 1100-50 2,350 2,350
-
OM Performance obligation 1200 1200-60 4,000 4,000
-
OM Performance obligation 1200 1200-70 1,800 1,800
-
Recognize
Revenue
Recognize CL
Recognize CA
E.G.

22. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Oracle’s Product Response for Topic 606 & IFRS 15
Topic 606 and IFRS 15 Requirements & Objective
Fusion Revenue Management Footprint & Features
Transition Arrangements
Peoplesoft & JD Edwards
Where we are on the timeline
1
2
3
4
5

23. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Co-Existence Functional Architecture
On the Cloud (or on premise)
Audit & Analyze
1.Identify & 3. Value Contracts
from many sources
•.Establish SSP & ESP
2.Identify & 4. Value
Performance Obligations
Create Accounting
• Separate revenue / billing
• Value @ Perf. Obligation
• Satisfaction –ratable,
immediate, pending;
Satisfaction forecasts
• Generate revenue and
contract asset & liability
balances entries using
Performance Obligation
valuation
• Seeded revenue reports
for compliance reviews
and audit
• Ad hoc reporting layer
EBS Order
Management
EBS Projects
EBS Service
Contracts
EBS Accounts
Receivable
3rd Party
Revenue Events Extracted via Delivered Source Views
Fusion Revenue Management
EBS Order
Management
EBS Accounts
Receivable
EBS Costing
PaymentCustomer Acceptance Revenue
General Ledger
Accounting
First Four Steps 5. Recognize Revenue

24. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Centralized
workarea
Actionable
Analytics and
Reporting
Spreadsheet
IntegrationFUSION REVENUE MANAGEMENT
Revenue
accounting
Revenue
Sources
Reference
data
Automated
Compliance
Coexistence – Automated Revenue Management
Centralized, Automated Revenue Management

25. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
On-Premise
ERP Cloud - Pre-packaged Integration
Cloud to On-Premise Integration
25
REVENUE MANAGEMENT Cloud Spreadsheet
Integration
Centralized
Dashboard
Actionable Analytics
and Reporting
Automated
Compliance
Revenue
Accounting
Revenue
Sources
Reference
Data
 Automated extract sales, contract and
other revenue transactions from EBS
 Automated load of source contract
transactions to ERP Cloud secured
‘Universal Content Management
Server’ and subsequent processing
for revenue recognition
 Compliant revenue subledger data
exported to Accounting
 Define and load revenue pricing data
using spreadsheets
 Predefined processes to synchronize
customer and item data master data

26. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Oracle Fusion Revenue Management
Addressing Key Challenges for Revenue Managers
Demand for
Automation
Automation of contract
identification, expected
consideration and performance
obligation valuation
Identify Contracts With Customers
• Automatically identifies Performance Obligations as part of a
Contract With A Customer
• Supports cross application and cross document Contracts With
Customers
Calculate and Manage “Expected Consideration”
revenue pricing
• Automatically groups stand alone sales based on user defined
pricing dimensions
• Imports Estimated Selling Prices from Budgeting & other
processes
• Supports multiple representations of SSP & ESP
Allocate Transaction Price to Performance
Obligations
• Automatic validation of compliance with Expected Consideration
• Creates adjustments based on relative observed selling prices
and relative estimated sales prices

27. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Oracle Fusion Revenue Management
Addressing Key Challenges for Revenue Managers
Track Performance Obligations separately to
Receivables
• Revenue document follows the Performance Obligation using
Step 4 valuation and planned customer fulfilment
• Automatically assign satisfaction events to recognize revenue
on performance (and delay until performance)
• Generate accounting entriesAdjust Performance Obligation Values
• Revenue price allocations automatically calculated, visible on
the Revenue Document by performance obligation, ready for
accounting
• Performance satisfaction forecasting, revenue value
adjustments, delay or advance revenue on performance
updates
Manage Revenue
• Workarea provides centralized view of revenue tasks and status
• Central reporting platform for all revenue processing
Many
Sources of Truth
Centralized repository for
reporting and accounting

28. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Oracle’s Product Response for Topic 606 & IFRS 15
Topic 606 and IFRS 15 Requirements & Objective
Fusion Revenue Management Footprint & Features
Transition Arrangements
Peoplesoft & JD Edwards
Where we are on the timeline
1
2
3
4
5

29. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
• Option One A, full retrospective, requires you to reprocess all transactions
• Option One B, practical expedient, requires you to reprocess all transactions relevant at
year-ends, (deferred revenue balances plus some)
• Option Two requires you
– (a) to reprocess contracts already executed in your deferred revenue world as if they were in a
performance obligation world, for the opening balance sheet for the year beginning after 1/1/2017,
– (b) and then to reprocess new contracts already executed in your performance obligation world
under the new guidance, as if they were in a deferred revenue world, using the old guidance.
• Fusion Revenue Management ships with reprocessing capability
Transition Data Need: Reprocess all/some transactions

30. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Transition
• There are two transition options with certain sub-options; nine ways in total.
• In practice, you need to model them all (planning, guidance, taxation, etc.)
– There is a substantial dollar value difference between them
* deferred revenue that may never be realized
* performance obligations that are already satisfied
• To model one option, you need to re-iterate with different performance obligation or different prices or
different recognition rules: it will be reiterative
• We’re suggesting that:
1. Use your existing RR system to do “old rules”
2. Use FRM post Rel. 9 to do new rules in FY 2017 and iterative modeling before that
3. Use Essbase to figure the difference between #1 and #2 for restatement purposes

31. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Transition Comparison: $ impact & Full/Partial Retrospective
Model new rules in Fusion Revenue Management, compare and iterate as needed, and cutover in CY 2016
Existing Revenue
Recognition Process
Topic 606 / IFRS 15
Using Fusion Revenue
Management
FY15, FY16
General
Ledger
Content
EPM &
Original
Financial
Statements
FY 17
General
Ledger
Content
EPM &
Original
Financial
Statements
Old Rules & Restatement until last balance sheet before adoption
(2017)
New Rules Apply
Cutove
r
FY 2017
EPM &
Restated
Financial
Statements
Oracle
Essbase
Home
Grown
Iterative
Modeling
FY 2016
Compare and
Contrast
Old and New in
Oracle Essbase

32. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Transition Comparison: $ Impact, Big Bang & Later
Disclosure
Model new rules in Fusion Revenue Management, compare and iterate as needed, and cutover in CY 2016
Existing Revenue
Recognition Process
Topic 606 / IFRS 15
Using Fusion Revenue
Management
FY15, FY16
General
Ledger
Content
EPM &
Original
Financial
Statements
FY 17->
General
Ledger
Content
EPM &
Original
Financial
Statements
Old Rules & Restatement until last balance sheet before adoption
(2017)
New Rules Apply
Cutove
r
FY 2017
Oracle
Essbase
Home
Grown
Iterative
Modeling
FY 2016
Compare and
Contrast
Old and New in
Oracle Essbase
Oracle
Essbase
Old Revenue System Maintained until +/- 2020
EPM &
Restated
Financial
Statements

33. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Oracle’s Product Response for Topic 606 & IFRS 15
Topic 606 and IFRS 15 Requirements & Objective
Fusion Revenue Management Footprint & Features
Transition Arrangements
Peoplesoft & JD Edwards
Where we are on the timeline
1
2
3
4
5

34. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Peoplesoft: Flexible Software Adaptable to Each Organization’s Needs
Configuring Customer Contracts to Support the New Revenue Accounting Standard
Planned
for 9.2+
NewRevenueRecognition
Requirements
The Planned Solution for You
• Features That Promote Compliance with New Converged Standard
• Tools and Functionality that Provide Options Without Forcing
Change on Organizations With Simpler Contracts
NewPlannedCapabilities
Streamlined Allocation of Contract
Price
New Attributes to Identify Bundled
Products and Services
Price Determination for Revenue
Flexibility to Maintain Prices for
Revenue Separately from Billing
Mgt of Contract Obligations, Reports,
& Support of Price Audits
Impacts All Organizations with Revenue
from Customers
New Accounts In GL and Additional
Schedules at Qtr/Yr End
Comprehensive Transition and
Comparative Reporting Reqts.
Documentation and Audit
Biggest Impact-Multiple Products & Services
Bundled Products, Variable Prices, Fin’d Prod

35. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
• New feature to support recognition of revenue
for invoices without a contract
• Performance Liability Accounting
• Recognize all, none, less than, or more than the
invoice amount
– Performance obligation completion is determined by
a process defined by the organization utilizing the
system
• Audit trail of all revenue recognition activity
JDE: Accounts Receivable Revenue Recognition
New Feature

36. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
• Additional capabilities to tie detailed
project costs to contract performance
obligations
• Flexibility to manage change orders
and existing contract performance
obligations in different ways
• More control of invoicing that affect
revenue adjustments
JDE Contracts Revenue Recognition
New Flexibility

37. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Oracle’s Product Response for Topic 606 & IFRS 15
Topic 606 and IFRS 15 Requirements & Objective
Fusion Revenue Management Footprint & Features
Transition Arrangements
Peoplesoft & JD Edwards
Where we are on the timeline
1
2
3
4
5

38. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Understanding the Standard: Old versus New
Mandate: Don’t recognize Revenue until all delivered Mandate: Recognize Revenue once performed
Deferred
Revenue is a
sales invoice
you are
feeding to
the P&L
Contract
Liability is a
performance
obligation
you have not
delivered on
UBR are
receivables
you haven’t
billed yet
Contract
Assets
are not
Receivables,
and you
might even
have
billed
already
Revenue and
Deferred
Revenue are
valued at
invoice value
Plus or minus
Carve-ins and
carve outs
Revenue and
Contract
Balances are
valued at
Performance
Obligation
value per Step
Four
VSOE, TPE, Estimate = Fair Value OSSP, ESP = Expected Consideration
Multiple Element
Arrangement
Contract
With Customers
Elements
Units of Account
Distinct
Performance
Obligations
The
Constrain
t
Revenue
Schedule
Performanc
e
Satisfaction
Specific USA
Industries
All Commercial
Customers
Bill, then defer Four steps to valuation, then book that
Follow the
carve out
Follow
Customer
satisfaction

39. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Understanding the Standard : Old versus NewFAS
B IAS
B
Mandate: Don’t recognize Revenue until all delivered Mandate: Recognize Revenue once performed
Deferred
Revenue is a
sales invoice
you are
feeding to
the P&L
Contract
Liability is a
performance
obligation
you have not
delivered on
UBR are
receivables
you haven’t
billed yet
Contract
Assets
are not
Receivables,
and you
might even
have
billed
already
Revenue and
Deferred
Revenue are
valued at
invoice value
Plus or minus
Carve-ins and
carve outs
Revenue and
Contract
Balances are
valued at
Performance
Obligation
value per Step
Four
VSOE, TPE, Estimate = Fair Value OSSP, ESP = Expected Consideration
Multiple Element
Arrangement
Contract
With Customers
Elements
Units of Account
Distinct
Performance
Obligations
The
Constrain
t
Revenue
Schedule
Performanc
e
Satisfaction
Specific USA
Industries
All Commercial
Customers
Bill, then defer Four steps to valuation, then book that
Follow the
carve out
Follow
Customer
satisfaction
Repealed

40. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
New Standard Concept Release 8 & 9 VSOE Concept
Contract with Customer Multiple Element Arrangement
Performance Obligation Element of the Arrangement
Observed/Estimated Standalone SP VSOE, TPE, ESP
Contract Liability Deferred Revenue
FRM Initial Release: US GAAP “VSOE” support
Released in March 2014

41. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
FRM Initial Release : US GAAP “VSOE” support
Released in March 2014
New Standard Concept Release 8 & 9 VSOE Concept
Contract with Customer Multiple Element Arrangement
Performance Obligation Element of the Arrangement
Observed/Estimated Standalone SP VSOE, TPE, ESP
Contract Liability Deferred Revenue

42. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
Fusion Revenue Management Timelines
 Release 8 is generally available (March 2014), moving to 9 now
– Early adopters signing up
– More information available on cloud.oracle.com
 Release update for new standards
Release UpdatesCode & Test
Customers & Big 4
Review
& Study
Final
Standard
May 28, 2014 Today Don’t Panic, Do Hurry UpMarch ‘14 TBD

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Release 8 and 9 (VSOE) (available
since March ‘14)
EBS & Instance integration
Identify “MEA”
Identify “Element”
Value “MEA”
Value “Element”; VSOE
Five Steps
Accounting for Deferred Revenue
(sales invoices)
US Hitech VSOE delivery
Summer 2015
ID Contracts w. Customers
ID Performance Obligations
Value Contract
Value Performance Obligation;
SSP, ESP
Valuation before invoicing
Accounting for Performance
Obligations (steps 2 & 4)
General Non-Specific
Framework
Other Plans
Customer & Big Four Input,
as available
Specific Industry compliance
Additional Features in
Revenue Management
Additional features in
Receivables, Project
Accounting, et cetera
Disclosure Reporting
Fusion Revenue Management Availability

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More about Fusion Revenue Management
Conference
Session
Thursday,
Oct 02
10:15 AM -
11:00 AM
CON8402 - Oracle Fusion Revenue Management
Cloud Service: Highlights and Customer Adoption
Tapomoy Dey, Senior Director, Oracle
Westin
Market Street
Metropolitan II
Monitor our blog at https://blogs.oracle.com/FinancialsMkting

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Questions and Answers

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