Armanino Blog

Revenue / Expense Deferral

February 10, 2009

The Revenue / Expense Deferral module in Dynamics GP is one of three options we regularly use to assist our clients in managing their deferred revenue. The other two are Project Accounting and Contract Administration.

The deferral module is the easiest to use, is quite flexible, and provides a solid report option that ties out to the balance sheet account(s) you use to hold deferred amounts.

The deferral module allows you to defer amounts from a specific GL distribution. The GL distribution can be from the GL, RM, PM,SOP, Invoicing, or POP module. Essentially what the module does, is automatically create GL entries into the future, to match the deferral schedule.

The deferral schedule can be created from scratch each time you need to create one, or you can use a Deferral Profile that can specify, the length of deferral, GL accounts used, start date, etc.

Dynamics GP Deferral Profile Maintenance>

Below is the result of a deferral profile being "allocated" to a GL distribution for a $50,000 software sale. The sale is being deferred evenly out, over three years.

In this case, when the invoice is posted, the credit amount for the sale will go to a balance sheet account, '2115', instead of a sales account. At posting, the deferral module will create 36 GL transactions spanning the next 36 months, that will debit the "Deferral Account", and credit the "Revenue Recognition" account.

Dynamics GP Deferral Profile Selection>

This is what the GL distribution entry looks like. In this case, the deferral profile is setup to match the "SALES" transaction type, and the GL account, "000-2115-00".

Dynamics GP Sales Distribution Entry>

This is the control report that should match the deferral account(s) you have set up. What's nice about this report is that you can run it for any date, and it should match the GL amounts for that date. To match to the deferral module report, you would want to make sure that the only transactions in the account(s) were those generated by the deferral module.

Dynamics GP Revenue Expense Deferral Module>

The Revenue / Expense Deferral module can be used to control various deferral situations. If you're not using it, and have some deferred revenue or expense accounting issues, you will want to check it out.

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