Issues with Prospective Merging Adopting ASC 606

We are in the process of adopting ASC 606 and we have have RMA’s that represent partial terminations to existing sales orders.  So for instance, we may have a software user SKU that gets downgraded from 5 users to 4 users with no other changes to the contract.

In this scenario we believe GAAP requires us to apply prospective accounting where we i) lock the accounting through that date and ii) reallocate unrecognized revenue to the remaining deliverables.

We tried to execute this in NetSuite via a script that is trying to apply prospective merging out of the box.  However, we are running into scenario where a large percentage of revenue arrangements are unable to reallocate revenue post merge and therefore no revenue can be recognized in the system.

This is currently with Netsuite and they have said this is a defect, but we were hoping someone else here may have dealt with this and maybe has a workaround and/or some guidance for us on how to move forward.





Rookie Asked on November 10, 2021 in Revenue Recognition.
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