Deferred Expenses
Deferred Expenses are the expenses that occurred in the reporting period but are subject to inclusion in the expenses of future reporting periods.
See Defer Revenues and Expenses to learn more about the standard functionality of Deferred Expenses.
This article describes the process of working with the deferred expenses (DE) accounting functionality in the SMART Localization of Business Central.
Creating Deferral Template and assigning an item
To distribute expenses for the appropriate future periods, you must set up a Deferral Template. To do this:
- Click
to open Search, enter Deferral Templates, follow the link. - Click New to create a new template.
- On the Deferral Template card, fill in all required fields:
| Field | Description |
|---|---|
| Deferral Code | This field indicates the code of the deferral template, which will later be displayed in other related documents. |
| Deferral Account | In this field, you need to indicate the G/L account to which the deferred expenses will be posted. |
| Deferral % | This field indicates the proportion of the total expense that will be charged to future periods. |
| Calc. Method | This field indicates how the deferred amount will be distributed. |
| Start Date | In this field, define when calculation and distribution of deferred expenses should begin. |
| No. of Periods | In this field, specify the number of periods for which the expense amount will be distributed. |
| Period Desc. | This field contains the description that will be displayed in deferral entries. |
Once the corresponding Deferral Template has been created, it can be assigned to an item. To do it:
- Click to open Search, enter Items, follow the link.
- On the item list page, select the item the expenses for which must be deferred.
- On the Costs & Posting tab, fill in the Default Deferral Template field. The value of this field will be used and displayed on the purchase invoice lines.
Deferral Posting Setup
On the General Posting Setup page, make sure that the Deferral Account Transit field is filled in for the intersection of the general business posting group and the general product posting group used for deferred expense posting. On this account, some deferral entries will be posted when posting deferral item/services purchase invoices.
Posting an Invoice with Deferral Expenses
Create a purchase invoice with an item in lines to which the Deferral Template has been assigned by default. See Record Purchases with Purchase Invoices to learn more about purchase invoices.
If necessary, you can change the Deferral Template code on the purchase invoice lines. To do this, select the required Deferral Template in the Deferral Code field.
To preview the deferral entries that will be posted to the General Ledger in future periods, click Posting > Preview Posting.
G/L entries that will be posted to the deferral account specified when setting up the Deferral Template will contain a description from the Period Description field of the corresponding Deferral Template. Also, for such entries, a new source type has been added – Deferral – which will be entered in the corresponding Source Type field.
To view and analyze entries related to deferred expenses, you can use the G/L Source Turnover by specifying the deferral source type.
Note
There are restrictions for transactions in foreign currency. When applying a posted purchase invoice and advance payment, the deferral item must be revalued manually at the advance payment rate using the financial journal.