Prepaid Expense Amortization workflow

With the PEA module, you set up prepaid expense classes which define how to amortize an expense and over how many periods.

Prepaid expense schedules can be created manually or directly from your bills or vendor invoices, and work in coordination with prepaid expense classes to generate the individual prepaid expense schedule entries. These entries are the amortized transactions that you review and post to your prepaid expense journal from month to month.

PEA components

The PEA module consists of three new objects: prepaid expense classes, prepaid expense schedules, and prepaid expense schedule entries.

Prepaid expense classes are the backbone of Prepaid Expense Amortization (PEA). Most notably, they define how many periods the prepaid expense is amortized. Additionally, they determine the expense account to be debited during amortization as well as the journal to which prepaid expense schedule entries post. Amortization method and period buckets are also determined by the prepaid expense class, but each item currently only has one option supported and available.

Prepaid expense schedules work in coordination with prepaid expense classes to automatically generate the month-to-month prepaid expense schedule entries you post to your journal. Most importantly, prepaid expense schedules determine the expense amortization start date, the amount to be amortized, and the prepaid expense class to be used which defines the periods. Furthermore, you set the currency, GL account to be credited, and any dimensions required by the expense account in your prepaid expense schedule. You can even attach a bill to the schedule for previously entered prepaid expenses.

Prepaid expense schedule entries are the individual journal entries automatically created by Sage Intacct when you generate your prepaid expense schedules. They carry information about GL posting date and amount, but they go to the prepaid expense schedule for all other information required, including the expense account, dimensions, GL journal, and so on. As you post these entries from month to month, you can post them as they have been generated or you can manipulate the GL posting date and amount of each schedule entry to customize schedule entries for your company. Once you review and post every entry of a prepaid expense schedule, the status of the related prepaid expense schedule changes from In Progress to Completed, signaling the completion of the amortization life cycle.

PEA workflow

Though PEA is easy to use, the module follows a specific workflow:

Workflow example: Bill

You have a $12,000 bill for rent that you want to amortize over the next year.

Step	Example
Prerequisite: Create prepaid expense classes	Before you enter your bill, check your Prepaid Expense Class list for an appropriate prepaid expense class, such as Rent_12. If you already have an appropriate class, move on to the next step. If you don't, create a prepaid expense class. Typically, most necessary prepaid expense classes are created during the implementation process for Prepaid Expense Amortization. If you already have the prepaid expense class you need, you can create your prepaid expense schedule.
Create your prepaid expense schedule	Enter the bill as usual. In the Entries section, select Show Details and include the Prepaid Expense Schedule Name (Rent 2017), Expense Amortization Start Date (1/1/2017), and a Prepaid Expense Class (Rent_12). Also be sure to include any dimensions required by the GL expense account defined in the prepaid expense class. For instance, let's say the related GL expense account requires a department and a vendor.
Generate your prepaid expense schedule	Once you've finished creating and editing the bill, post it. Since PEA fields are included on the bill, Intacct automatically generates the prepaid expense schedule record (Rent 2017) and all 12 related prepaid expense schedule entries for you. Each prepaid expense schedule entry should be $1,000 in this case (Amount/# of Period). Once generated, you can edit your prepaid expense schedule or your prepaid expense schedule entries as needed to suit the demands of your business.
Approve and start your prepaid expense schedule	Before you approve and start your prepaid expense schedule, review your prepaid expense schedules to ensure all the required information is included. You can't edit prepaid expense schedules once they are approved and started. Once you approve and start a schedule, the prepaid expense schedule and prepaid expense schedule entries are locked in to the system, and you cannot make any changes to them. In this case, be sure that the Department and Vendor dimensions are included, and that the selected dimension values are active. If they aren't included or aren't active, you need to make changes to your prepaid expense schedule before approving and starting the schedule. Once reviewed, approve and start your prepaid expense schedule. When you start a prepaid expense schedule, the related prepaid expense schedule entries change from Review to Pending and are ready to be posted to the GL.
Post your prepaid expense schedule entries	From month to month, review your prepaid expense schedule entries on the Prepaid Expense Schedule Entries list and post the appropriate entry for each period. In this case, you would post the schedule entry for period one on 1/1/2017, then the schedule entry for period two on 2/1/2017 and so on until the end of the schedule. Once you post every schedule entry of the prepaid expense schedule, the status of the prepaid expense schedule (Rent 2017) changes from In Progress to Completed.