In Oracle Application R12 COGS process has been changed. Reason for that are aggressive revenue recognition practices as well as the guidelines from various governing bodies.
Till R11 Cost of goods sold has been recognized as soon as the Order lines has shipped, as shown in below steps
After ship confirm, user run the interface trip stop (ITS).
ITS in turns run the OM Interface and Inventory Interface.
Inventory Interface calls Inventory transaction manager which in turns call COGS WF.
But as per new practices COGS should be recognized along with the revenue.
In R12 used need to define deferred cogs account. These deferred cogs account can be defined at each inventory org level.
During shipping process Inventory tables will hold the deferred COGS accounts. Only after invoicing has done in AR, AR will notify the Costing, and Costing in turns call the COGS account generator to get the cogs account .In that way COGS and revenue will be recognized in the same period.
There are few exceptions like how to get the COGS for
Ship only line (No Invoice will be created).
To handle above cases Close-line activity of the order line workflow has modified to call the costing API to get the cogs value.
Ur's
AmarAlam
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