Advanced Revenue & Expense Deferrals Parameters

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

• Yes: 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.
• No: The amount is calculated based on the number of days in each period. Default setting.

You can override this setting at the transaction level.

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

• Separate schedule for discount: 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.

• Merge discount with revenue: 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: 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.

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

• Separate schedule for discount: 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.

• Merge discount with revenue: 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.

Select whether to consolidate deferral schedule lines for prior periods.

• Yes: 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.
• No: 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.

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

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

You can override this setting at the transaction level.

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

For information on how these settings work, see Short-Term Deferral Calculation.

Select the method used to create deferral transactions: 

• Balance sheet: Uses the balance sheet posting method to create deferral transactions. Default option.

• Profit and loss: 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.

View distribution examples.

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.

Example 1 - Item A102-58 is sold with the extended price of 1,200.00

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

Example 2 - Multiple deferral and non-deferral items on a sales invoice

Item	Deferrable	Sales	Initial Sales	Sales Offset	Deferred Revenue
A102-58	Yes	Sales (A102)	Initial Sales (A102)4100-25	Sales Offset (A102)	Deferred Revenue (A102)
A504-75	Yes	Sales (A504)	Initial Sales (A504)4100-10	Sales Offset (A504)	Deferred Revenue (A504)
A800-99	No	Sales (A800)

The following table shows the distribution: 

AR		1,200.00
	Deferred Revenue (A102)		500.00
	Deferred Revenue (A504)		300.00
	Sales (A800)		400.00
Sales Offset (A102)		500.00
	Initial Sales (A102)		500.00
Sales Offset (A504)		300.00
	Initial Sales (A504)		300.00

Example 3 - COGS and discount

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.

Example - Item A102-58 is purchased with the extended price of 1,200.00

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

Example: Item purchased with a discount

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.

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.

View example that uses this option.

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.

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

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

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

• No: Does not automatically post journal entries created by ARED. You must manually post any journals.

Select whether to consolidate recognition vouchers by default.

• Yes: 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.
• No: Creates a voucher for each recognition line. Default setting.

You can override this setting on the Recognition processing form.

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

You can override this setting at the transaction level.

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. View 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. View format.

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

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.

Displays the number sequence used for deferral schedules.