Suggested by Annaik Boudin – Needs Votes
Subscription billing allows to defer Cost of goods sold. But only the COGS posted during sales invoice is deferred.
If customer has FIFO item model Group (or MWA...), when invoice is posted, COGS is based on averaged cost and adjusted during inventory closing adjustment. This inventory adjustment should also be deferred.
Consequence: financial reporting will show incorrect value. Decision maker could not used standard financial report.
If COGS value at invoice posting is not fully closed, then all COGS will be posted during closing adjustment at one specific date.
Deferral period 1/1/2022..12/31/2022
12/10/2021 Sales invoice revenue = 12000
Sale invoice COGS = 100
12/3/2021 Closing adjustment = 10000 (all purchases / production order / .. are closed)
in 2022, each month deferred revenue = 1000 / deferred consumption = 8.33 => Margin = 991.67
But Margin should have been deferred revenue 1000 - Deferred consumption (841.67) = 59.33