Ratable Revenue Recognition Plan in REVLOCK

REVLOCK automatically generates revenue recognition schedules based on service start date and service end date. This article shows the calculations REVLOCK will use to establish monthly amounts.

REVLOCK defines a range-of-dates using the Half-Open approach (start <= x < end) where the service start date is inclusive while the service end date is exclusive.

You can choose between two methods.

30/360 Ratable Plan
Classic Ratable Plan

30/360 Ratable Plan

When this method is used REVLOCK generates Ratable plans using a simplifying assumption that each year is a 360-day year (twelve 30-day months).

(1) First Period

First month revenue recognition number is prorated based on number of days remaining in the first month. In case first month has 30 or more days, it is considered a full month. In such case full month revenue is recognized for the first month.

(2) Last Period

Last month revenue recognition number is prorated based on number of days remaining in the last month. In case last month has 30 or more days, it is considered a full month. In such case full month revenue is recognized for the last month.

(3) Remaining Periods

Revenue for the remaining period, i.e. period that are in between first and last period is calculated by dividing remaining revenue with number of remaining period.

Examples below explain how amounts for each step is calculated in 3 different scenarios.

Examples Days360

Classic Ratable Plan

This is a classic method and prorates first and last period based on number of remaining days in a month

(1) First Period

First month revenue recognition number is prorated based on number of days remaining in the first month. In case first month has 28 or more days, it is considered a full month. In such case full month revenue is recognized for the first month.

(2) Last Period

Last month revenue recognition number is prorated based on number of days remaining in the last month. In case last month has 28 or more days, it is considered a full month. In such case full month revenue is recognized for the last month.

(3) Remaining Periods

Revenue for the remaining period, i.e. period that are in between first and last period is calculated by dividing remaining revenue with number of remaining period.

Examples below explain how amounts for each step is calculated in 3 different scenarios.

Example 3 - 28 days = Full period:- REVLOCK considers first or last period with 28 or more days to be a full month, that is the reason we see full month revenue for March 2020 in Example 3

Classic Ratable Plans
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