Defer Revenues and Expenses
To recognise a revenue or an expense in a period other than the period in which the transaction was posted, you can use functionality to automatically defer revenues and expenses over a specified schedule.
To distribute revenues or expenses on the involved accounting periods, you set up a deferral template for the resource, item, or G/L account that the revenue or expense will be posted for. When you post the related sales or purchase document, the revenue or expense are deferred to the involved accounting periods, according to a deferral schedule that is governed by settings in the deferral template and the posting date.
To set up a G/L account for deferral
- Choose the icon, enter Chart of Accounts, and then choose the related link.
- Choose the New action.
- Fill in the fields as necessary to create a G/L account for deferred revenues. For more information, see The General Ledger and the Chart of Accounts.
- Repeat steps 2 and 3 to create a new G/L account for deferred expenses.
For both types of deferral, select Balance Sheet in the Type field, and name the accounts appropriately, such as "Unearned Income" for deferred revenues and "Unpaid Expenses" for deferred expenses.
To set up a deferral template
Choose the icon, enter Deferral Templates, and then choose the related link.
Choose the New action.
Fill in the fields as necessary.
In the Calc. Method field, specify how the Amount field for each period on the Deferral Schedule page is calculated. You can choose between the following options:
- Straight-Line: The periodic deferral amounts are calculated according to the number of periods, distributed according to period length.
- Equal Per Period: The periodic deferral amounts are calculated according to the number of periods, distributed evenly on periods.
- Days Per Period: The periodic deferral amounts are calculated according to the number of days in the period.
- User-Defined: The periodic deferral amounts are not calculated. You must manually fill the Amount field for each period in the Deferral Schedule page. For more information, see the “To change a deferral schedule from a sales invoice” section.
In the Period Desc. field, specify a description that will be shown on entries for the deferral posting. You can enter the following placeholder codes for typical values, which will be inserted automatically when the period description is displayed.
- %1 = The day number of the period posting date
- %2 = The week number of the period posting date
- %3 = The month number of the period posting date
- %4 = The month name of the period posting date
- %5 = The accounting period name of the period posting date
- %6 = The fiscal year of the period posting date
Example: The posting date is 02/06/2016. If you enter “Expenses deferred for %4 %6”, then the description displayed will be "Expenses deferred for February 2016".
To assign a deferral template to an item
The steps in this procedure are the same as when you assign a deferral template to a G/L account or a resource.
- Choose the icon, enter Item, and then choose the related link.
- Open the card for the item for which revenues or expenses must be deferred to the accounting periods when the item was sold or purchased.
- In the Default Deferral Template field, select the relevant deferral template.
To change a deferral schedule from a sales invoice
The steps in this procedure are the same as when you change a deferral schedule, for expenses, from a purchase invoice.
Choose the icon, enter Sales Invoices, and then choose the related link.
Create a sales invoice for an item that has a deferral template assigned. For more information, see Invoice Sales.
Notice that as soon as you enter the item (or resource or G/L account) on the invoice line, the Deferral Code field is filled with the code of the assigned deferral template.
Choose the Deferral Schedule action.
On the Deferral Schedule page, change settings on the header or values on the lines, for example to defer the amount to an additional accounting period.
Choose the Calculate Schedule action.
Choose the OK button. The deferral schedule is updated for the sales invoice. The related deferral template is unchanged.
To preview how deferred revenues or expenses will be posted to the general ledger
The steps in this procedure are the same as when you preview how expense deferrals are posted.
- On the Sales Invoice page, choose the Preview Posting action.
- On the Posting Preview page, choose the G/L Entry action, and then choose the Show Related Entries action.
G/L entries to be posted to the specified deferral account, for example, Unearned Income, are denoted by the description that you entered in the Period Desc. field in the deferral template, for example, "Expenses deferred for February 2016".
To review posted deferrals in the Sales Deferral Summary report
The steps in this procedure are the same as when you review the Purchasing Deferral Summary report.
- Choose the icon, enter Sales Deferral Summary, and then choose the related link.
- On the Sales Deferral Summary page, in the Balance as at field, enter the date up to which you want to see deferred revenues.
- Choose the Preview button.
To specify a period in which to allow deferral posting
You can specify a period in which people can post transactions by entering dates in the Allow Posting From and Allow Posting To fields as follows:
- For all users, on the General Ledger Setup page
- For specific users, on the User Setup page
If you've done that, you must make an exception for deferrals to allow them to be posted outside the period. To define the period, follow these steps.
- Choose the icon, enter General Ledger Setup or User Setup, and then choose the related link.
- In the Allow Deferral Posting From and Allow Deferral Posting To fields, enter a start and end date for the period.