Amortize Expense for a Payable

Body

Overview

Expense Amortization is typically used to spread expenses over the period of time for which those expenses will be incurred. Amortization Entries can be created directly from a Payable with the selected period of time spread over up to 60 Accounting Periods.

Note: If you need to spread the time period over more than 60 Accounting Periods, refer to the Amortization for more than 60 Accounting Periods section below.

In Accounting Seed, one of three Amortization methods can be selected from the Create Amortization Entries wizard, which displays when you click Amortize Expense from a Payable record.

Important: Please make sure you have the correct Amortize Expense button on your Payable page. The button should have the API Name "AcctSeed__Account_Payable__c.AcctSeed__Amortize_Expense" and not "AcctSeed__RecognizeExpense".

These Amortization methods include the following:

Straight Line - Prorated Monthly - this is the default Amortization method, which is a hybrid of the Full Month and Daily Amortizations. The first and last months will be prorated based upon the remaining days in the first month and the amount still remaining during the last month. The amount for each month between the first and last months will be the same (straight line). The Accounting Periods must already be set up and are open for the number of selected periods. When this method is selected, the number of Accounting Periods and a Start Date are required fields.
Straight Line - Full Month - the amount will be divided equally among the number of selected Accounting Periods. The Accounting Periods must already be set up and are open for the number of selected periods. When this method is selected, the number of Accounting Periods and a Start Date are required fields.
Straight Line - Daily - the amount for each period is based upon the number of days in each month. When “Daily” is the selected Amortization method, the Start Date and an End Date are required fields.

Amortization for more than 60 Accounting Periods

As mentioned earlier, in the UI (User Interface) the selected period of time can be up to 60 Accounting Periods. If you need to amortize for a longer period of time, the Amortization API supports up to 360 Accounting Periods. This can be executed using Apex code or from a flow, which provides invoking flexibility.

When you execute the Amortization method, the returned result is an AmortizationResult object, which will contain a list of Amortization entries objects (if successful). However, the Amortization method does not commit these record to the database. This allows for data inspection before committing it to the database, and if necessary, manipulation before committing. For example, you might have added a custom field to the SObject, and you want to populate it prior to committing to the database. Or, you might want to run multiple scenarios to present to a user before committing. It also allows for better performance when invoked from a flow. The caller is responsible to commit the records to the database based upon their choice of action.

For more information, refer to our Amortization API documentation: Amortize Method, Amortization Options, and the Amortization Result.

Multi-currency

For foreign currency Payables (where the currency on the Payable is different from the Ledger currency), the Amount field in the Create Amortization Entries wizard will display the Ledger Amount from the Payable that is being amortized. As a result, when you click Preview Calculations, the Ledger Amount will display divided across the Accounting Periods. To support pre-existing functionality, the Amortization Entries are created in the Ledger currency.

Create Amortization Entries wizard

The Create Amortization Entries wizard includes hyperlinks to the Payable number, Vendor name, and Ledger, as well as a Help link to this Knowledge Base article.

The wizard includes the ability to preview calculations of the Amortization based upon the periods and amounts. Below is an example of the preview calculations for each Amortization method. Each of the three sample screens below are based upon the total amount of $4,000.00.

Straight Line - Prorated Monthly

With this Amortization method, notice that the first month is prorated based upon the remaining days in that first month. Using this example, for the next four months, the amount is exactly the same. And, the final (last) month is prorated based upon the remaining amount.

Straight Line - Full Month

With this Amortization method, the amounts will be equally divided among the number of periods.

Note: In some instances, the final period may be slightly different depending upon the initial amount.

Straight Line - Daily

With this Amortization method, the amount for each period is based upon the number of days in each month. Using this example, the Start Date (Issue Date) is April 15, and the End Date will be August 31. Therefore, each period is based upon the number of days for each month between the Start Date and End Date. The month of April is based upon 15 remaining days and the other four months are based upon the total number of days in each month.

Return to top

Amortize Expense for a Payable

Navigate to Accounting Home and click the Create Entries tab. Then, under the Expenses menu, click Payables (Vendor Invoices).
Select a list view (other than the Recently Viewed list view).
Select the Payable for which you want to Amortize Expense.
Click Amortize Expense. The Create Amortization Entries wizard displays.
Select one of the following Amortization methods:
1. Straight Line - Prorated Monthly
2. Straight Line - Full Month
3. Straight Line - Daily
Click Next to add the Term Information. Then, update the following based upon the selected Amortization method:
1. Straight Line - Prorated Monthly or Straight Line - Full Month: The Amount, which is the sum of the subtotal of the Payable Lines, will automatically pre-populate from the Payable. If the Amortize Deferred Revenue/Expense setting is set to “On,” only the Payable Lines that include the Default Deferred Expense GL Account entered in the Revenue & Expense Amortization Details section of the Default GL Accounts screen will be included as part of the Amount. If this setting is “Off,” the subtotal amount of all Payable Lines will display in the Amount field. The Amortize Deferred Revenue/Expense setting can be turned “On” or “Off” from this dialog box.
  
  The Amortize Deferred Revenue/Expense setting on the Create Amortization Entries wizard will default to “On” or “Off” based upon the Amortize Deferred Revenue/Expense setting in the Enablements screen.
  1. 1. (Optional) Modify the Amount and/or Start Date
    2. (Optional) Modify the Amortize Default Revenue/Expense setting by turning it “On” or “Off"
    3. Add the Number of Accounting Periods.
      Note: This field cannot be blank. An error message will display if this field is left blank.
    4. If using Multi-book Accounting, make the appropriate selection from the Accrual and/or Cash drop-down list. If the Accounting Method on the Ledger is set to Accrual & Cash, but you set a default value for the Accrual and/or Cash field on the Amortization Entry object, it will automatically display as the default value in this drop-down list.
      
      Note: For information about how to set a default value, refer to the Set a Default Value for the Accrual and/or Cash field in the Spring ’25 Preview 1 Configuration Changes article.
      
      Once in the Amortization wizard, you can change that default value, if necessary. However, if the Ledger on the Payable is Accrual or Cash, the Accrual and/or Cash drop-down list on this screen will automatically default to the Accounting Method on the Ledger. Therefore, this drop-down list will not be editable.
2. Straight Line - Daily: The Amount, which is the sum of the subtotal of the Payable Lines, will automatically pre-populate from the Payable. If the Amortize Deferred Revenue/Expense setting is set to “On,” only the Payable Lines that include the Default Deferred Expense GL Account entered in the Revenue & Expense Amortization Details section of the Default GL Accounts screen will be included as part of the Amount. If this setting is “Off,” the subtotal amount of all Payable Lines will display in the Amount field. The Amortize Deferred Revenue/Expense setting can be turned “On” or “Off” from this dialog box.
  
  The Amortize Deferred Revenue/Expense setting on the Create Amortization Entries wizard will default to “On” or “Off” based upon the Amortize Deferred Revenue/Expense setting in the Enablements screen.
  1. 1. (Optional) Modify the Amount and/or Start Date
    2. (Optional) Modify the Amortize Default Revenue/Expense setting by turning it “On” or “Off"
    3. Add the End Date.
      Note: This field cannot be blank. An error message will display if this field is left blank.
(Optional) Enter a Description.
To review the calculations, click Preview Calculations.
Note: In the example, Straight Line - Full Month was the selected method. Therefore, the Preview Calculations are based upon monthly amounts for the selected number of Accounting Periods.
From the Preview Calculations, click Back to return to the Term Information.
Click Next to access Accounting Information & Create.

Note: The required Debit GL Account and Credit GL Account defaults from the Default GL Accounts settings in the Revenue & Expense Amortization Defaults section. Click X to remove the defaults and select another GL Account number, if necessary.
(Optional) Enter any or all of the remaining GL Accounts such as Project and Project Task.
Click Create Entries to create the Amortization Entries.
To view the entries from the Payable, click the Amortization tab.

Note: The entries are also available from the Amortization Entries hyperlink on the Accounting Home page by selecting Create Entries | Ledger | Amortization Entries.

Note: Once the Amortization Entries have been created, the entries will automatically be posted based upon the Post Settings.

Note: Click here to view the above image in full screen.

The naming convention for each Amortization Entry Name is the Payable number, followed by the first to last Accounting Period. For example, in the sample screen above the Amortization Entry Name for the first entry is AP-00007(Payable number), followed by the first Accounting Period (2022-04).

Note: If a Proprietary Payable Number was added to the Payable, when the Amortization Entries are created, the actual Payable Number will still display as part of the naming convention for the Amortization Entry Name.
From here, you can click an Amortization Entry Name hyperlink to access each record to review or make edits, if necessary.

Note: Click here to view the above image in full screen.