When you have an invoice from a supplier but want to record the amounts on the invoice in a Prepaid Expense GL Account and subsequently recognize them in a future period, you can use either Event Prepaid Expenses or Deferred Voucher Expenses.
Event Prepaid Expenses
You can use Event Prepaid Expenses to defer the recognition of an expense until the period when the event finishes.
Configure Event Prepaid Expenses
- Click the Accounts Payable Configuration link from the Main Menu. The Accounts Payable Configuration screen opens.
- Select the Vouchers and 1099 Values tab.
- Expand the Voucher Processing subsection.
- Enter the following information:
-
Auto Prepaid Enabled For - Determines how you use event prepaid expenses.
- None - Event Prepaid Expenses are not available for vouchers.
- Events - Vouchers assigned to an event that starts in a future period are automatically marked as Prepaid Event Expenses.
- Jobs - Vouchers assigned to a job that starts in a future period are automatically marked as Prepaid Event Expenses.
- Events and Jobs - Vouchers assigned to an event or job that starts in a future period are automatically marked as Prepaid Event Expenses.
- Prepaid Expense Account - Click the hyperlink to select the GL account (or sub account) to use as the default when recording the Prepaid Event Expenses. This is normally an asset account.
-
Auto Prepaid Enabled For - Determines how you use event prepaid expenses.
- Click OK.
Create a Voucher with Event Prepaid Expenses
The below process updates the supplier's Payable Ledger and generates a journal entry to the prepaid GL account. Follow the instructions in Supplier Invoices (Vouchers) to create the voucher with the distribution to the expense GL account where it should be recognized, then make the following adjustments in the Voucher Distribution tab for the voucher:
- Show the following columns in the Voucher Distribution tab: Event/Job, Prepaid, Prepaid GL Account, Prepaid GL Account Name and Prepaid GL Sub Account, if applicable.
- Select an event or job with a start date in a future fiscal period from the Event/Job column. The Prepaid column check box is checked and the Prepaid GL Account and Prepaid GL Sub Account (if applicable) display the accounts selected in the Prepaid Expense Account field configured in the Configure Event Prepaid Expenses section. To the override the default GL account/sub account, edit the respective column before saving and posting the voucher.
- Click the Save (disk) button.
- Follow your usual voucher approval and post process.
Generate a Journal Entry to Recognize Prepaid Event Expenses
The below process posts a journal entry to move amounts from the prepaid GL account to the expense GL account specified on the Voucher Distribution tab for the voucher. Before beginning the below steps, ensure that the GL Source for Event Prepaid Reversals (EP) is available for your organization.
- Click the Journal Entries - Event Prepaid Reversals link from the Main Menu. The Journal Entries | Event Prepaid screen opens.
- Click the Add button. The Add Journal Entry | Event Prepaid screen opens.
- Enter the necessary information:
- Description - Name for the journal entry.
- Year-Period - Fiscal year and period for the journal entry.
- Entry Number - Unique alphanumeric code. *AUTO auto-generates an entry number based on the next available number.
- Reverse Entry - If checked, a reversing entry is created in the next fiscal period when the journal entry is posted. Leave unchecked for event prepaid reversal journal entries.
- Transaction Date - Date for the journal entry.
- Currency - Currency for the journal entry.
- Expand the Advanced section.
- Enter the necessary information:
- Event - Event for the event prepaid reversal. If an event is selected, the Event Date Used and Date From/To fields become unavailable.
- Event Date Used - Event date to use to include events in the journal entry: Event End, Master Event Move Out or Move Out.
- Date From/To - All prepaid event expenses for events within the entered date range for the date selected in the Event Date Used drop-down are reversed.
- Click the Save (disk) button.
- Click the Tools button.
- Select Generate Journal Entry. Journal entry lines are created for the journal entry based on the entered event and date information.
- Follow your usual journal entry approval and post process.
Deferred Voucher Expenses (Amortization)
You can use Deferral Schedules to defer the recognition of an expense until a specific date or write it off evenly across periods in a particular date range. This is particularly useful for expenses that are paid quarterly/annually but you need to recognize them in your profit and loss on a monthly basis.
Create a Voucher with Deferred Voucher Expenses
The below process updates the supplier's Payable Ledger and generates a journal entry to the prepaid GL account. Follow the instructions in Supplier Invoices (Vouchers) to create the voucher with the distribution to the expense GL account where it should be recognized, then make the following adjustments in the Voucher Distribution tab for the voucher:
- Show the following columns in the Voucher Distribution tab: Deferral Schedule, Deferral Template, Start Date, End Date, Prepaid, Prepaid GL Account, Prepaid GL Account Name and Prepaid GL Sub Account, if applicable.
- Check the Deferral Schedule check box in the expense row you want to defer.
- Select the deferral schedule from the Deferral Template drop-down:
- Straight Line - Recognizes partial amounts for each fiscal period between the entered start and end dates.
- End Date - Recognizes the full value of the expense in the fiscal period of the entered end date.
- Enter the start date into the Start Date field. This is not required if using a Straight Line Deferral Schedule.
- Enter the end date into the End Date field.
- Click OK. The Prepaid GL Account and Sub Account (if applicable) defaults to the deferred GL account selected on the expense GL Account for that record or the Prepaid GL Account in the Accounts Payable Configuration screen if none is selected on the expense GL account.
- Follow your usual journal entry approval and post process.
Create a Journal Entry to Recognize Deferred Voucher Expenses
The below process posts a journal entry to move amounts from the prepaid GL account to the expense GL account specified on the Voucher Distribution tab for the voucher. Before beginning the below steps, ensure that the GL Source for Deferred Revenue/Cost Reversals (DR) is available for your organization.
- Click the Journal Entries link from the Main Menu. The Journal Entries screen opens.
- Click the Add button. The Select General Ledger Source screen opens.
- Select Deferred Revenue/Cost Reversals (DR) from the GL Source drop-down.
- Click Continue. The Add Journal Entry screen opens.
- Enter the necessary information:
- Description - Name for the journal entry.
- Year-Period - Fiscal year and period for the journal entry.
- Entry Number - Unique alphanumeric code. *AUTO auto-generates an entry number based on the next available number.
- Reverse Entry - If checked, a reversing entry is created in the next fiscal period when the journal entry is posted. Leave unchecked.
- Transaction Date - Date for the journal entry.
- Currency - Currency for the journal entry.
- Expand the Advanced section.
- Enter the necessary information:
- Period End Date - All deferred entries with a recognition date prior to this date are reversed.
- Revenue/Cost - Select Cost.
- Click the Save (disk) button.
- Click the Tools button.
- Select Generate Journal Entry. Journal entry lines are created for the journal entry based on the entered event and date information.
- Follow your usual journal entry approval and post process.
View Deferral Schedule Details
Once a voucher with deferral details has been posted, the schedule for the deferral is viewable via the Deferral Schedules window.
1. Click the Deferral Schedules link from the Main Menu. the Deferral Schedules window opens.
2. All of the voucher lines where Deferral Schedule was checked will be listed.
3. Select Edit to view the schedule and see the details for the amount recognized as opposed to left unrecognized for future periods.
- Schedules where Recognition Status = New are active deferral schedules being utilized.
- Schedules where Recognition Status = Completed are deferral schedules where all recognitions have taken place and no more deferrals are expected per the schedule.
Comments
10 comments
Hello,
Is there a process for if the following instances occur:
1) The GL account used in the initial transaction is incorrect for some reason - is there an automated way to change the coding?
2) If the date range selected for start and end dates is entered incorrectly (i.e. entered for 12 months but the amortization should only be 3 months), is there a way suggested to correct this?
0 upvotes
Hi Michael,
Right now, entering a transaction to reverse the original and re-enter the correct transaction is the only process to correct the automated amortisation details.
Cheers,
Kelly
0 upvotes
Hi Momentus Team.
I just would like to inquire, can we run deferral cost recognition twice for a given month? If not, how can we close a line for a given period in the deferral schedule?
Thanking you in advance.
Regards
0 upvotes
Hi Ruel,
It is possible to run the Cost Deferral journals multiple times within a period to pick up additional lines of new deferral schedules. Once you have posted the Journal, the deferral lines included in that journal should be marked with a fiscal period and the relevant journal entry details.
If you are not seeing the line in the deferral schedule being marked with the fiscal period/journal entry details, please submit a ticket to our Support team who will check if the system is working as expected, or if a software correction is required.
Many thanks,
Chelsea
0 upvotes
Hi Chelsea,
Thank you very much for your response. Yesterday, I have tried to run the Cost Deferral journals and thankfully, I was able to generate the journal entries. I have raised an inquiry about it because during that time, when I run the Cost Deferral for additional insurance amortization, there was a notification on the screen that there was nothing to generate. I am not sure if the error is related to my connection at that time or something else.
Your kind response is greatly appreciated.
Regards,
0 upvotes
Hi, Momentus Team.
Good morning.
In relation to the above inquiry, I have created several deferral schedules for medical insurance, and software license renewals. While running month-end deferred expense recognition, I have noticed that the system generated one entry for all the prepayments with deferral schedule. What we would like to do is to generate separate entries for each prepayment with a deferred schedule, however, the system currently does not allow us to delete an entry line item from the generated entry. Is there any way in the system where recognition of deferred expenses can be done by grouping them based on the nature of the expense?
Thanking you in advance.
Regards.
0 upvotes
Hello,
Is there a process for if the following instances occur:
After the event prepaid reversal journal has been post, we identified the account and department based on the voucher are incorrect. How could we correct it in this situation? When we try to reclass the entry, there is a error message "Invalid Prepaid Sts: You have entered a".
Thank you,
Caroline
0 upvotes
Hi Ruel,
Please bear with us a little longer. I am just double checking the options for you.
Many thanks,
Chelsea
0 upvotes
Hello Ruel,
Thanks for you patience. I discussed this with our Product team and they also see the benefit of having the possibility of one Deferred Expense Recognition journal entry per Prepaid voucher. Can you please submit a Product Idea for this?
If you have any other ideas about how you think this would work best, please include this in your request for the Product team to consider.
Here are the steps to add a Product idea:
Access the Support Center. (https://supportcenter.ungerboeck.com )
Go to the The Community by clicking on the Collaborate! button.
Click on the Product Ideas tab.
Click the Enter the Forum button for the forum where you would like to add the enhancement request. (An idea may fit in several forums, just pick one - no need to enter the request in multiple forums.)
Click the Create a Post in this Topic button.
Complete the form and click the Submit button.
Kindest regards,
Chelsea
0 upvotes
Hi Caroline,
I have checked your issue with the team and found it has already been flagged to our Product team. They are currently looking into it, but have advised that you can use the following workaround in the meantime:
1. When adding the reclass journal, add the 'Prepaid Status' column in the Journal Entry Details grid.
2. Change the Prepaid Status to blank and then continue to make your required changes to the details.
By changing this Prepaid Status, you should find your reclass journal can then be posted without error, as per normal.
Please let me know how you go with trying out this workaround.
Many thanks,
Chelsea
1 upvotes
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