How To Fix FARR_CONTRACT_MAIN124 - Non-distinct performance obligation &1 cannot be time-based

SAP Error Message - Details

• Message type: E = Error

• Message class: FARR_CONTRACT_MAIN - Revenue Accounting: Contract Management

• Message number: 124

• Message text: Non-distinct performance obligation &1 cannot be time-based

Self-Explanatory Message

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Smart SAP Assistant

• What is the cause and solution for SAP error message FARR_CONTRACT_MAIN124 - Non-distinct performance obligation &1 cannot be time-based ?

  The SAP error message FARR_CONTRACT_MAIN124 indicates that there is a problem with the performance obligations defined in a contract, specifically that a non-distinct performance obligation cannot be treated as time-based. This error typically arises in the context of revenue recognition and contract management within SAP, particularly when using the SAP S/4HANA system with the Revenue Accounting and Reporting (RAR) module.
  Cause:
  
  
  Non-Distinct Performance Obligation: The error suggests that the performance obligation in question is classified as non-distinct. Non-distinct performance obligations are those that cannot be separately identified from other obligations in the contract. This means that they are not capable of being fulfilled independently.
  
  
  Time-Based Recognition: The system is trying to apply time-based revenue recognition to a performance obligation that is not distinct. Time-based recognition typically requires that the performance obligation can be fulfilled independently over time, which is not the case here.
  
  
  Solution:
  
  
  Review Performance Obligations: Check the performance obligations defined in the contract. Ensure that they are correctly classified as distinct or non-distinct based on the criteria set out in the relevant accounting standards (e.g., IFRS 15 or ASC 606).
  
  
  Adjust Contract Terms: If the performance obligation should be distinct, consider modifying the contract terms to ensure that it can be recognized independently. This may involve separating the obligations or redefining them.
  
  
  Change Recognition Method: If the performance obligation is indeed non-distinct, you may need to change the recognition method from time-based to another method that is appropriate for non-distinct obligations, such as recognizing revenue at a point in time.
  
  
  Consult Documentation: Refer to SAP documentation or guidelines related to revenue recognition and performance obligations to ensure compliance with accounting standards and correct configuration in the system.
  
  
  SAP Support: If the issue persists after reviewing and adjusting the contract, consider reaching out to SAP support for further assistance. They may provide insights specific to your configuration or version of the software.
  
  
  Related Information:
  
  Revenue Recognition Standards: Familiarize yourself with the relevant accounting standards (IFRS 15, ASC 606) that govern revenue recognition and performance obligations.
  SAP RAR Configuration: Review the configuration settings in the SAP RAR module to ensure that performance obligations are set up correctly.
  Training and Documentation: Consider training for users involved in contract management and revenue recognition to prevent similar issues in the future.
  
  By addressing the classification of performance obligations and ensuring compliance with revenue recognition standards, you should be able to resolve the error message FARR_CONTRACT_MAIN124.