PLM Accrual Rule 15

Rule 15 is the set of terms used to define the accrual period start and end dates from the billing period start and end dates. Rule 15 involves the following criteria:

1. If the Invoice Next Date of the first period starts before the 15th of the month, the accrual starts on the 1st of the month.

2. If the Invoice Next Date of the first period starts after the 15th of the month, the accrual starts on the 15th of the month.

3. If the Invoice Next Date of the last period starts before the 15th of the month, the accrual ends on the 1st of the month.

4. If the Invoice Next Date of the last period starts after the 15th of the month, the accrual ends on the last day of the month.

5. If a charge is terminated, the same rule is used to end the accrual on the 15th or on the last day of the month.

6. The accrual amount of the first period is calculated as either the entire monthly amount of half of the monthly amount depending on whether the accrual starts on the 1st or on the 15th of the month.

7. The last period of accrual is calculated as the difference between the invoiced total and accrued total.

8. The Total Amount on the PLM accrual page should match the Total Amount for all periods on the Charge Details page.

To learn more about terminating a lease with attached expense accruals and how Rule 15 applies to this scenario, refer to Rule 15 Termination.

Example

The Consulting Fee charge is added to the lease with a 1-year term. The fees are $1,000 a month, paid bi-weekly through payroll. The user marks the charge to be Accrued. The bi-weekly payment amount is $461.54 (12,000/26).

1. When the Fees are added to the lease the following details are calculated and displayed for the user:

   1. Total contract amount = $12,000

   2. Total invoice amount = $0

   3. Total accrued amount =$0

2. In January, the user runs the Accrual Recognition process that will create journal entries to record the January accrued expense amount:

   db. Charge Expense 54100 (Purch. account) 1,000

   cr. Accrued Expense 1,000

3. Also, in January, the user run the Invoice Creator to record the lease payment journal entries. The JE were created twice, on Jan 14th and on Jan 28th.

   db. Accrued Expense 461.54

   cr. Clearing Account/AP 461.54

   The Accrual details get updated as follows:

4. On Jan 14 after the PLM Invoice Creator:

   1. Total contract amount = $12,000

   2. Total invoice amount = $461.54

   3. Total accrued amount = $0

5. On Jan 28 after the PLM Invoice Creator:

   1. Total contract amount = $12,000

   2. Total invoice amount = $923.08

   3. Total accrued amount = $0

6. On Jan 31 after the Accrual Process:

   1. Total contract amount = $12,000

   2. Total invoice amount = $923.08

   3. Total accrued amount = $1,000

7. In February, the same process will be continued. The user will run the PLM Invoice Creator on Feb 11th and Feb 25th and also the user will run the Accrual process on Feb 28th. The following accrual details will be updated at the end of February:

   1. Total contract amount = $12,000

   2. Total invoice amount = $1,846.16

   3. Total accrued amount = $2,000

For more details on reporting, refer to PLM Accrual Expense Report.