Posting VSOE Revenue to the General Ledger

When revenue is recognized for items not sold as a vendor-specific objective evidence (VSOE) bundle, the invoice price is the amount that posts to the assigned deferred revenue account for each line that has a revenue recognition schedule. When revenue is recognized for a VSOE transaction, the VSOE allocation amount (not the sales amount) posts to the assigned deferred revenue account.

For example, you sell the following items:

• Service Item A1

  • Deferred revenue account =Deferred Revenue (Service)

  • Invoice price =$300

• Product Item B2

  • Deferred revenue account =Deferred Revenue (Product)

  • Invoice price =$600

When these items are not sold as a VSOE bundle, the desired general ledger impact is as follows:

On another transaction, the items are sold as a VSOE bundle. The VSOE allocation is as follows:

• Service Item A1

  • Deferred revenue account =Deferred Revenue (Service)

  • Invoice price =$300

  • VSOE allocation =$225

• Product Item B2

  • Deferred revenue account =Deferred Revenue (Product)

  • Invoice price $600

  • VSOE allocation =$675

When these items are sold as a VSOE bundle, the desired general ledger impact is as follows:

To achieve the desired general ledger impact and properly recognize VSOE amounts, NetSuite posts to the ledger as follows:

1. The sales amount posts to the deferred revenue account.

2. The sales amount is reversed out of the deferred revenue account.

3. The VSOE allocation amount posts to the deferred revenue account.

Applying these steps to the previous examples, the VSOE sale would post to the general ledger a follows:

General Notices