Revenue and Expense Deferrals is an often-overlooked module within Microsoft Dynamics GP that is highly useful for amortizing revenue and expenses related to annual software maintenance plans, insurance policy costs, annual licensing costs, and other assets such as goodwill.
This module can be highly useful in creating and posting IFRS entries. Our clients have all chosen to set up a unique IFRS company database to keep their IFRS entries completely separate from US GAAP entries. Revenue and Expense Deferrals help automate the monthly and quarterly IFRS statement preparation.
The Deferral Warning Options is especially useful to prevent clerical staff from making distribution mistakes with vital control accounts. The first thing we do in Revenue and Expense Deferral setup is mark to warn with distribution changes to Cash, Accounts Receivable, and Accounts Payable.
Of the two deferral posting methods, the Balance Sheet Type is most commonly selected because it’s the simplest. If your deferrals are straightforward—your amortization of your annual insurance contracts, for example—choose this method.
If your deferrals involve software maintenance plans allowing for credits and cancellations, choose the Profit and Loss method.
The Profit and Loss method may be preferred in order to make your Direct or Indirect Cash Flow Statement a more automatic and accurate report. You would segregate additions and subtractions to the deferral balance sheet asset and liability accounts in order to represent sources and uses of cash for financing and investing activities. See my article on IFRS Accounting with Microsoft Dynamics GP: Cash Flow Statements – Indirect Methods…and the Benefit of Direct over Indirect.
Setup and operation of Revenue and Expense Deferrals is covered in your General Ledger reference manual. If you have Microsoft Dynamics GP Advanced Management, don’t ignore this useful module that can potentially save you a lot of time with monthly and annual adjusting entries.
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