Prepayment For Non Monetary Assets

The amount of an advance payment (prepayment) in foreign currency provided to other persons against payments for the acquisition of non-monetary assets (inventory, fixed assets, intangible assets, etc.) and receipt of works and services, when included in the cost of these assets (works, services) is converted into the reporting currency using the exchange rate as of the date of the prepayment. In the event of prepayments in a foreign currency to the vendor in parts and receipt of non-monetary assets (works, services) in parts from the vendor, the value of the received assets (works, services) is recognized at the amount of prepayments using exchange rates, based on the sequence of prepayments.

In the Ukrainian localization of Business Central, calculation and posting of the value of the received assets (works, services), posted prepayments in foreign currency, can be applied to the following:

• posted purchase invoice – Scenario 1
• issued purchase invoice – Scenario 2

The general scenario for applying prepayments to vendor documents is implemented as follows:

1. Checking the system settings that affect the mechanism for applying prepayments.
2. Posting of prepayment.
3. Issuing and posting of the Purchase Invoice.
4. Applying prepayment to the Purchase Invoice.
5. Checking General Ledger Entries.

To apply prepayments, some system settings are required.

System settings for prepayment application

General Ledger Setup

1. Choose the icon, enter General Ledger Setup, and then choose the related link.
2. In the General Ledger Setup window, Application FastTab, check that fields are set up as described in the table below.

Field	Description
Displaying document types field group > Purchase	Checkboxes for Apply Purchase Invoices, Apply Purchase Order, Apply Posted Purchase Invoices settings determine the visibility of the respective document types on the Open Documents tab in the Bank Payment Journal.
Autom. Application, Autom. Deferred Application field group	Enables the ability to automatically apply payments that were created on the Open Documents tab in the Bank Payment Journal based on the vendor documents.
Divide Prepayments	Enables the ability to automatically set the Prepayment attribute in the Bank Payment Journal if the entry was created on the basis of an issued document.
Setting prepayment attribute	Enables the ability to automatically set the Prepayment attribute in the Bank Payment Journal if the entry was created on the basis of an issued document.
Specifying payment purpose	Uses the field value to form payment purpose in the Bank Payment Journal.

Set up Payment Journal batch

1. Choose the icon, enter Payment Journal, and then choose the related link.
2. In the upper part of the Payment Journal window, go to the code card of the Payment journal batch using the button.
3. For the general journal batch used to post payments, make sure that the Number Series or Posting Number Series fields are filled out. These fields are used to generate the document (payment) number.

Changes in the numbering of documents, including using the document renumbering mechanis, may lead to incorrect operation of the algorithm for applying prepayments.

Vendor Posting Groups

1. Choose the icon, enter Vendor Posting Groups, and then choose the related link.
2. For a Vendor Posting Group for which import operations are planned to be posted, make sure that the Advance Payment Account field is filled out (Usually, for prepayments, the subaccount of account 371 “Calculations of advances issued” is used, but a different account can be chosen according to the accounting policy of the company).

Scenario 1: applying a prepayment to a posted purchase invoice

Purchase Invoice Posting

1. Choose the icon, enter Purchase Invoices, and then choose the related link.
2. Using the button, create and fill out a new Purchase Invoice. For import operations, the document currency must be different from the local currency.
3. In the Purchase Invoice, click Post.

Vendor Prepayment Posting

1. Choose the icon, enter Bank Payment Journal, and then choose the related link.
2. Payments can be created in different ways:
3. Using the Import Bank Extract button (the system settings must be prepared in advance and the file must be exported from the system of the corresponding bank).
4. By filling out all the required fields in the journal line.
5. Based on a previously posted Purchase Invoice. To do this, in the Open Documents section, select Counterparty Type = “Vendor” and select a Counterparty in the “Counterparty Code” field. Place the cursor on the purchase invoice and create a payment – More option > Actions > Options > Create payment.
6. Make sure that the Advance Payment option is enabled for payment on the journal line.
7. Select Post.
8. Make sure that, in the debit of the General Ledger account, the prepayment was posted to the advances account.

Prepayment application to purchase invoice

1. Choose the icon, enter Vendors, and then choose the related link.
2. Find a required counterparty and open their Ledger Entries in Process > Ledger Entry.
3. Make sure that the list of documents contains lines with the “Invoice” and “Payment” types, which were added earlier in the scenario. The amount in the “Balance Amount” and “Balance Amount (LCY)” must be different from zero.
4. Place the cursor on the “Invoice” line and in the Process > Apply Entries menu, go to the Apply Entries form.
5. If there is no Application ID in the application form, go to Process > Set Application Code. The book amount after application must be zero.
6. In the Process > Post Application menu, post the operation of applying the prepayment to the Purchase Invoice.
7. Make sure that in the list of documents, the values in the “Balance Amount” and “Balance Amount (LCY)” columns have decreased by the amount of the posted prepayment. If the invoice amount is equal to the payment amount, these balance amounts should equal 0.
8. Make sure that in the Purchase Invoice, the cost of the purchased assets (services, items) has been adjusted by the amount of the exchange rate difference between the prepayment and the posted invoice.

Scenario 2: prepayment application to issued purchase invoice

1. Choose the icon, enter Purchase Invoices, and then choose the related link.
2. Using the button, create and fill out a new Purchase Invoice document.
3. In Purchase Invoice, select Issue.

Posting and application of vendor prepayment

1. Choose the icon, enter Bank Payment Journal, and then choose the related link.
2. In the Open Documents section, select Counterparty Type = “Vendor” and select a Counterparty in the “Counterparty Code” field. Place the cursor on the purchase invoice and create a payment – More option > Actions > Options > Create payment.
3. Make sure that the Advance Payment option is enabled for payment on the journal line.
4. Check that the application code is set in the Applies-to ID column – the option in the General Ledger Setup – Autom. Application has worked.
5. If the payment was made manually or imported from the banking system, use More option > Actions > Options > Apply Prepayments. When opening the form, the system automatically sets the Applies-to ID. When clicking the Set Applies-to ID button, the system sets/removes applications. When returning to the Bank Payment Journal, the Applies-to ID will be set in the payment line.
6. Click Post.
7. Make sure that, in the debit of the General Ledger account, the prepayment was posted to the advances account.
8. The application of prepayment to the issued document can be checked in the Vendor Lender Entries. Find the required vendor and open its Ledger Entries in Process > Ledger Entry. Go to Navigation > Operation > Applied Documents.

Issued Invoice Posting

1. Choose the icon, enter Purchase Invoices, and then choose the related link.
2. Find Purchase Invoice with the Issued status and click Post.
3. Make sure that in the posted Purchase Invoice, the cost of purchased assets (services, items) has been adjusted by the amount of the exchange rate difference between the prepayment and the posted invoice.