This document discusses Armanino's Revenue Management solution for Microsoft Dynamics AX. The solution helps companies that sell bundled products and services properly account for and recognize revenue from multi-element arrangements. It allows specification of individual accounting units within bundles and automated deferral and recognition of revenue according to accounting guidelines. The solution is intended for industries like electronics, software, and telecommunications that commonly offer bundled products and services.

1. Revenue Management
for Microsoft Dynamics AX
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2. Example of Companies using Armanino’s Revenue
Management Solution for Dynamics AX
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3. Q. What types of companies typically use Armanino’s
Revenue Management for Microsoft Dynamics AX?
A. Any company that sells multi-element arrangements or
bundles. A few examples include:
• Electronics OEMs
• Telecommunications
• Industrial Equipment Mfrs
• Electro-Medical Device Mfrs
• Software Companies
• And many more
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4. Examples of Multi-Element Arrangements
or Bundles
Any packaged combination of
items such as (but not limited to):
Services
Hardware
Software
• Multi-software offerings
• Software and services
• Software, hardware, and services
Support
Warranties
• Hardware, post contract support and
warranties
The challenge is each of these accounting units needs to be recognized
individually to ensure appropriate accounting. If companies do not determine
value of (or break out) multi-elements, they have to treat the arrangement as a
single unit of accounting. This results in the deferment of more revenue upfront.
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5. Business Challenge & Revenue Management Solution
Armanino’s Revenue Management Module for Dynamics AX addresses
many of these common business scenarios:
• Selling packaged bundles such as software packages, software and
services, hardware plus post contract support (PCS) and warranties, etc.
• Accounting needs to identify & allocate appropriate revenue to each element
• Manage the automatic deferral and recognition of revenue
• Recognize revenue upon events or with an
Item #3
amortization schedule
Revenue
And enables companies to:
Item #2
Revenue
by unit
by unit
 Specify multiple elements or accounting units
within bundles
 Defer recognition until customer acceptance
 Handle mid-month contracts, adjustments,
and co-termination
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Item #1
Revenue
by unit
Bundle

6. Fundamental “Take Aways” regarding the Principals
of Revenue Recognition
1.
2.
Revenue management is about determining the
appropriate amounts & timing of revenue
recognition.
3.
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Companies that sell multi-element arrangements
must follow specific accounting guidelines under
GAAP (EITF 08-01, EITF 97-2, ASU, etc).
With Armanino’s Revenue Management for
Dynamics AX Module, companies can automate
their entire revenue deferral, reallocation and
carve out, and revenue recognition routines.

7. Core Concepts of Revenue Management
Determining the
Estimated Selling
Price
Identify Essential vs.
Non-Essential
Elements
Revenue
Amortization
Schedules
Allocations:
Revenue Carve
Outs & Reallocation
Timing & Amount
of Recognition
Revenue
Deferral
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8. Revenue Recognition According to GAAP
• EITF 97-2 & 98-9 – Residual method of accounting
GAAP
Generally Accepted Accounting Principles
• EITF 81-1 – Contract accounting
• EITF 08-01 (ASU 2009-13): Multiple deliverable revenue
arrangements
• EITF 09-03 (ASU 2009-14): Deals with arrangements that
include both hardware and software elements
GAAP provides guidelines for acceptable revenue recognition practices for a
given industry with specific considerations that need to be interpreted for each
company.
Armanino’s Revenue Management for Dynamics AX provides a flexible
parameter driven setup to automate the appropriate revenue calculations, deferrals
and recognition events – to comply with these GAAP requirements.
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9. Revenue Deferral & Recognition
Revenue rules determine recognition timing
•
Immediately upon invoicing
•
Deferred until an event, partial fulfillment or % based recognition
•
According to an amortization schedule
Recognition schedules can be static, dynamic, edited
•
Static - Fixed over 12 months
•
Dynamic –12 months, amortized over 13 periods, daily
calculations, with future start dates
•
Catch up – Spread over defined start/end date for co-termination
•
Edits & Adjustments – Adjust recognition start dates, hold until
customer signoff, returns and cancellations
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10. Establishing VSOE Based on Median Price
• Automate the systematic calculation of VSOE from historical sales
• Parameter driven, systematic calculation of median price:
o At “item” or “item group” level
o Minimum # of occurrences can be set
o Configurable time period definitions
o Thresholds / tolerances for including in calculation
o Ability to auto-update the VSOE revenue price table
o Full audit trail and justification reports
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11. Sales Order Entry & Invoice Format
Presented on
customer
invoice
- or -
BESP & Revenue Reallocation
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Revenue Basis for
GL accounting

12. Revenue Recognition / Deferral
• Recognized revenue and cost of goods (COGs) posted to GL at time of
invoice
• Deferred revenue and COGs posted to deferred accounts
• Automated revenue schedules generated for recognition of deferred
revenue
• Workbench to review schedules - edits, rescheduling, holds, partials, etc.
• Periodic routine or batch job auto-creates revenue recognition journals
• Full drill down of all postings & audit trail of all changes
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13. Dynamics AX 2012: Where does the Revenue Management
Module from Armanino fit in?
User
Layer
(User
Preferences)
Customer Layer
(Customer
Development)
Customer Development
Module sits here
VAR Layer
(Partner Customizations)
Partner Customizations
--------------------------------------------------ISV Layer
(Revenue Management)
--------------------------------------------------Microsoft Dynamics AX 2012
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14. About Armanino
• Microsoft Dynamics AX VAR since 2003
• 70+ certified AX consultants
• 4 Customer Excellence Award Winners
in the last 3 years
• Dynamics AX ISV TAP Program
• High Tech Industry Solutions:
o
Revenue Management
o
High Tech Manufacturing & Distribution
o
Distributor Sell-Through Management
o
Supply Chain Interface
• Dedicated post go-live support desk
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15. Learn More about Armanino’s Revenue Recognition
Management Module for Dynamics AX
For questions or to schedule a demo,
contact:
John Van Metre
Sales & Business Development
408.712.0743
john.vanmetre@amllp.com
Visit us online:
http://learn.amllp.com/revenue-recognitionmanagement-for-microsoft-dynamics-ax
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