In this article

Advanced Revenue & Expense Deferrals Parameters

Modules > Advanced revenue & expense deferrals > Setup > Advanced revenue & expense deferrals parameters

Use this page to set the default preferences and settings for Advanced Revenue & Expense Deferrals (ARED). The settings are effective company-wide.

Set Up Default Values

You set up the default values in the General tab: 

  1. In Equal per period, select whether the number of days in each period is considered or if all periods are considered to have the same number of days.
  2. For the Sales discount deferral option, select whether the discount amounts appear on a different deferral schedule from the deferral schedule for the sales order.
  3. For the Purchasing discount deferral option, select whether the discount amounts appear on a different deferral schedule from the deferral schedule for the purchase order.
  4. Select whether you want to Consolidate prior periods.
  5. Select how the Default deferral start date is determined.
    This option applies to deferral schedules that originate from the Sales Order page
  6. If you use short-term deferrals, select the Short-term deferral method and the Deferral posting method.

    7. If the  Deferral posting method is Profit and loss, select whether you want to be able to reverse the profit and loss amount when a credit adjustment is processed. For more information, review the description for the Reverse profit and loss on credit option.

  7. When recognizing a deferral schedule, select the journal options: 
    1. Select whether to Automatically post general journals.
    2. Select whether to Summarize recognition journal transactions so they are consolidated.
    3. Select the Default journal name for any journal transaction created from an ARED process.
    4. Select the source data for the Recognition journal line description.
  8. Select Save.

Set Up Auto Numbering

To set up the automatic number for billing schedules, do the following: 

  1. Select the Number sequences tab.
  2. Check that the Number sequence code has a value.
    • If the number sequence code is empty, you must generate the number sequence for the Reference number you want.
      For more information, see the Microsoft Dynamics 365 for Finance and Operations documentation.
    • If the number sequence has a value, continue to the next step.
  3. Select Save.

Fields

This page contains the following fields: 

Field Description
Schedule
Schedule
Equal per period

Specify whether the number of days in a period is taken into consideration when calculating the amount in each period for a deferral schedule.

  • : The amount for each period is the same regardless of the number of days in the period, except for partial periods (such as at the beginning or end of a deferral schedule) which will be prorated.
  • : The amount is calculated based on the number of days in each period. Default setting.

You can override this setting at the transaction level.

Sales discount deferral option

Select whether separate deferral schedules are created for the discount and the sales order amounts:

  • : Discount amount is kept separate from revenue amount.

    • When a sales order is created and then posted, two deferral schedules are created, and the discount and revenue amounts are posted to different deferral accounts.

  • : Discount amount is combined with revenue amount. One deferral schedule is created and both the discount and revenue amounts are posted to the same deferral account.

    • When a sales order is created and then posted, one deferral schedule is created and both the discount and revenue amounts are posted to the same deferral account.

Note icon. Note: To be able to apply discounts to items that use the unbilled revenue feature, select the Separate schedule for discount option. By selecting this option, discounts can be applied to all items, regardless if the unbilled revenue feature is used or not. If the Merge discount with revenue option is selected, discounts cannot be applied to items that use the unbilled revenue feature.

Purchasing discount deferral option

Select whether separate deferral schedules are created for the discount and the purchase order amounts: 

  • : Discount amount is kept separate from the expense amount.

    • When a purchase order is created and then posted, two deferral schedules are created, and the discount and expense amounts are posted to different deferral accounts.

  • : Discount amount is combined with expense amount. One deferral schedule is created and both the discount and expense amounts are posted to the same deferral account.

    • When a purchase order is created and then posted, one deferral schedule is created and both the discount and expense amounts are posted to the same deferral account.

 
Consolidate prior periods

Select whether to consolidate deferral schedule lines for prior periods.

  • : If the deferral start date is in a period before the transaction date, all amounts up to and including the period of the transaction date are combined into a single deferral schedule line. Default setting.
  • : The amounts from all periods are in separate deferral schedule lines regardless of the date.

If the deferral start date is in the same or a later period as the transaction date, this option has no effect.

You can override this setting at the transaction level.

Default deferral start date

Select the rule to apply to the transaction date to get the start date for the deferral schedule: 

  • :  Uses the 1st of the current month as the start date. If the transaction date is the 1st of any month, then the 1st of the current month is the start date.
  • : Uses the 1st of the next month as the start date. If the transaction date is on the 1st, the transaction date is used, otherwise the 1st of the following month is used.
  • Rule of 15: If the transaction date is between the 1stand the 15th, uses the 1st of the current month as the start date. If the transaction date is the 16thor later, uses the 1st of the next month as the start date.

You can override this setting at the transaction level.

Short-term deferral method

Select the short-term deferral method: None (default), Rolling periods, or Fixed year.

For information on how these settings work, see .

Deferral posting method

Select the method used to create deferral transactions: 

  • Balance sheet: Uses the balance sheet posting method to create deferral transactions. Default option.
  • : Uses the profit and loss posting method to create deferral transactions. When transactions are posted, you can review the invoice voucher to see the extra entries for balancing the initial recognition and recognition offset amounts.

The following examples demonstrate the distributions when the Deferral posting method for sales and purchase invoices is set to Profit & Loss.

Sales Invoice Processing

The following examples show the distribution when a sales invoice that includes a deferrable item is posted.

The following table shows the distribution 

AR   1,200.00  
  Initial Sales   1,200.00
Sales Offset   1,200.00  
  Deferred Revenue   1,200.00
Item Deferrable Sales Sales Offset Deferred Revenue
A102-58 Yes Sales (A102) Sales Offset (A102) Deferred Revenue (A102)
A504-75 Yes Sales (A504) Sales Offset (A504) Deferred Revenue (A504)
A800-99 No Sales (A800)    

The following table shows the distribution: 

AR   1,200.00  
  Sales (A800)   400.00

Item A102-58 is sold with the extended price 1,200.00, 10% discount and COGS value of 300.00.

The following table shows the distribution: 

AR 1,080.00  
Initial Discount 120.00  
  Initial Sales   1,200.00
Sales Offset 1,200.00  
  Discount Offset   120.00
  Deferred Revenue   1,200.00
Deferred Discount 120.00  
Initial COGS 300.00  
  COGS Offset   300.00
Deferred COGS 300.00  
  Inventory   300.00

Purchase Invoice Processing

The following example shows the distribution when a purchase invoice that includes a deferrable item is posted.

The following table shows the distribution: 

Initial Expense 1,200.00  
 

AP

   1,200.00
Deferred Expense 1,200.00  
  Expense Offset   1,200.00

Item A102-58 is purchased with the extended price 1,200.00 and a 10% discount.

The following table shows the distribution: 

Initial Expense AR 1,200.00  
  Initial Discount   120.00
  AP   1,080.00
Deferred Expense 1,200.00  
  Deferred Discount   120.00
  Expense Offset   1,200.00
Discount Offset 120.00  

After a sales or purchase invoice is posted, the deferral schedule is created.

Reverse profit and loss on credit

Available when Deferral posting method is Profit and Loss.

Select whether the profit and loss amounts are reversed when a reversal, termination, or refund is applied to a billing schedule or sales order.

  • Yes: Reverses the profit and loss amounts and applies a credit adjustment amount to the deferral schedule. Default.

    • If the reversal occurs halfway through a billing period, the amounts are prorated.

  • No: No reversal transaction for the profit and loss is created when a reversal, termination, or refund is applied to a billing schedule or sales order.

A sales order for a deferrable item is created and the transaction is posted. On the Voucher Transactions page, the following entries appear. In this situation, the distributions are as follows: 

Profit and loss entries appear for revenue, COGS, and discount. When a credit note is created for this invoice, the distributions are as follows: 

Reversal entries for the profit and loss appear for revenue, COGS, and discount. Also, on the Schedules page, you can see that the Adjustment amount for the deferral schedules for each of the amounts.

Recognition
Automatically post general journals

Select whether any journal entries created by ARED, such as those from recognition processing, should be automatically posted.

  • : Automatically posts journal entries created by ARED. Default setting.

    • Tip: By selecting , you can avoid and prevent any accounting inconsistencies caused by manual changes to vouchers.

  • : Does not automatically post journal entries created by ARED. You must manually post any journals.
Summarize recognition journal

Select whether to consolidate recognition vouchers by default.

  • : Creates a single voucher for all recognition lines with the same date. All lines in a voucher with the same account are consolidated into a single line.
  • : Creates a voucher for each recognition line. Default setting.

You can override this setting on the form.

Default journal name

Specify the journal name for any journal created from ARED processes, such as recognition processing.

You can override this setting at the transaction level.

Recognition journal line description

Select the description that you want to appear in the journal voucher line description:

  • Schedule line dates: Displays the schedule line dates in the journal line description. Default. ClosedView format.

    • The format of the description is: ScheduleNumber: LineStartDate - Line EndDate (for example, USMF-0001 : January 1, 2018 - January 31, 2018).

  • Originating transaction details: Displays the originating transaction information in the journal line description. ClosedView format.

    • The format of the description is as follows: ScheduleNumber, InvoiceOrVoucherNumber, LineOrVoucherDescription (for example, USMF-0001, CIV-00839, Software Revenue).

Number sequences

Use this tab to set the default deferral schedule number sequence. Before setting up the number sequences, review Generate Number Sequences.

Number sequences are automatically generated and assigned using the number sequence generation wizard. You do not need to change the number sequence unless you want to make manual changes on top of the generated number sequences.
Schedule number

Displays the number sequence used for deferral schedules.