Business Types and Constellations

Question 1

Constellations in which the RU holds the customer contract

Answer 1

Business on own account (Siemens conditions or NCM) + Silent Consortium

Question 2

General Business Types / Constellations

Answer 2

1) Commission Business
2) Business on Own account (incl. Silent Consortium)
3) Open Consortium
4) Contract split

Question 3

Commission Business - Constellation

Answer 3

Offshore holds the end customer contract, onshore received commission for intermediary services. Commission acts as decrease in functional costs once reception of commission payments

Question 4

Commission Business - Contract / Risk provisions / new orders / advance payments / revenue

Answer 4

Contract: Offshore holds contract
Risk: Offshore is responsible
New Orders: By BU as 3rd party OI
Advance pay: Only to offshore, not for onshore
Revenue: Offshore only, commission is decrease in functional cost for onshore

Question 5

BoA Siemens Conditions - New Orders / Advance Payments / Risk

Answer 5

New Order: Onshore shows full volume, offshore its own portion (consolidated)
Advance: No internal advance payments, not divided between off/on. Exception: Offshore volume >25m
Risk: Onshore = external risk, offshore = his scope

Question 6

BoA Revenue: Method 1

Answer 6

Onshore sets up two separate elements of the WBS. Offshore considered without margin

Question 7

BoA Revenue: Method 2

Answer 7

Whole project under one WBS.

Question 8

Differentiation between BoA with Siemens Conditions and NCM

Answer 8

Under BoA end customer conditions: Uniformly selected by off+on. Accounting method based on overall project
BoA Siemens conditions: Independently selected accounting method
BoA with end customer condition (boA-5/6): invoicing of the supplying subsidiary based on local GAAP. Invoicing takes place when all chances and risks have been transferred to the external customer (PAC)

Question 9

Silent Consortium

Answer 9

Only one partner of the consortium sign a contract to the end customer. Consortium leader fulfills the performance obligation acting on its own behalf and sole responsibility. Within consortium: Contract is divided between partners, internally liable

Question 10

Silent consortium - advance payments

Answer 10

Need to be divided between consortium partners as agreed in the consortium contract

Question 11

Silent consortium - revenue recognition

Answer 11

Leader: Shows all external revenue
Subs: Show their portion, gets consolidated

Question 12

Contract Split - advance payments

Answer 12

Internal advance payments are not permitted, advance payments received from customer are only presented by the contracting partner that issued the payment request

Question 13

Intercompany (crossing country borders)

Answer 13

A legal entity is dealing with a Biz&Serv unit situated in another country

Question 14

Intra company / inter SCU

Answer 14

Two Biz&Serv units within a legal entity are dealing together on a contract

Question 15

Intra company / intra SCU

Answer 15

Two Business Units of a Biz & Serv unit within a legal entity are working together on a project

Question 16

No internal business

Answer 16

Two legal entities are individually working on two different contracts with a customer

Question 17

True or False - According to method 1 and method 2, the offshore partner recognizes revenues to third parties in the amount of its offshore part before he invoices the onshore partner.

Answer 17

True, before the offshore partner invoices the onshore partner he recognizes revenues to third parties in the amount of its offshore part

Question 18

True or False - According to method 1 and method 2, the offshore partner, at the time of invoicing, reverses the recognized internal revenues by the amount invoiced and recognizes revenue to third parties in the same amount.

Answer 18

False, at the time of invoicing the offshore partner reverses the recognized revenues to third parties by the amount invoices and recognizes internal revenue in the same amount

Question 19

Intracompany Business - who takes risk?

Answer 19

Partners cover risks related to their part

Question 20

Contract Split - which constellation for the offshore portion

Answer 20

Commission business