How to create a new deferred expense entry in Odoo

The Odoo Accounting module has had its capability expanded with the addition of the “Deferred Expense” module. To deal with prepayments and delayed costs, you may have numerous entries prepared in draft mode and uploaded at regular intervals. Using the “Deferred Expense” module, users may create entries with future periods, which greatly simplifies the process of allocating costs.

In the article today, we will introduce you to the importance of deferred expense and How to create a new deferred expense entry in Odoo. Every online merchant should well acknowledge the steps to enhance the store’s performance in the long run. Keep reading to find out more!

Table of Contents

• The importance of Deferred Expense
• How to create a new deferred expense entry in Odoo
  • Step 1: Create a new entry
  • Step 2: Create a new entry from the Purchases Journal
• Conclusion

The importance of Deferred Expense

The payments that have been incurred but not yet used are considered Deferred Expenses. Until the underlying products or services are utilized, the cost is recorded as an asset, and only then is it charged to expenditure. Initial bookkeeping treatment of a delayed cost involves recognizing it on the balance sheet as an asset.

Because the accountant will have to manually input the deferral in the accounting software and remember to charge these things to expenditure at a later date, deferring the costs connected with lesser quantities of unconsumed products and services makes little practical sense. Instead, they should be recorded as expenses right away unless doing so would have a significant impact on the financial statements. Deferral treatment is reserved for just the most substantial of transactions under this strategy. The cost of office supplies is an excellent example of an expenditure that is incurred quickly despite the fact that the supplies may not all be used right away.

When generally accepted accounting rules or international financial reporting requirements demand that an item be capitalized into the cost of a long-term asset and written down over a lengthy period of time, the expense should be deferred. A building’s total cost, including interest, may exceed the value of the land on which it sits; hence the land’s value must be used to calculate the building’s depreciation during its useful life. The interest expenditure is being capitalized for the time being.

How to create a new deferred expense entry in Odoo

With the understanding of Odoo deferred expense, it’s time to better manage all of your customers’ accounts. We have divided our tutorial on How to create a new deferred expense entry in Odoo into small basic steps along with exemplified images so that you can save up time by comparing the results along the way.

Step 1: Create a new entry

In draft mode, all journal entries are generated as a Deferred Expense item. All of the payments are then recorded in the correct chronological order, making up the total expenditure. Click “Create” and fill out the form under Accounting > Accounting > Deferred Expense to make a new item.

To associate a previous purchase with this entry, click the “Choose Related Purchases” button. To finish, click the Related Expenses tab, and you will see the journal entry there with some of the required sections already filled in.

When you’re finished, click “Compute Deferral” (right next to Confirm) to have the Expense Board’s data generated automatically. Your expenses will be recorded in Odoo at the times and dates you specify on this board.

It is possible to more precisely account for expenses using the Prorata Temporis function. The length of time between the Prorata Date and the First Recognition Date is used instead of the standard amount of time between recognitions to determine the first item on the Expense Board.

The first item on the Expense Board in the previous example has a total of $70.97 rather than $100.00. As a result, the last line has a lesser value of $29,03.

Step 2: Create a new entry from the Purchases Journal

From a selected entry in your Purchases Journal, you may make a postponed entry. To accomplish this, choose the journal entry you wish to delay and open the Purchases Journal by heading to Accounting > Accounting > Purchases. Before performing the next task, the administration needs to make sure that the deferred expense gets entered into the correct account.

Then, after going to Action, choose Create Deferred Entry, and fill out the form as you would while creating a new entry.

Conclusion

In conclusion, our tutorial today on How to create a new deferred expense entry in Odoo has helped you to complete the task in a blink of an eye. From then, keeping track of your customers’ accounts along with generating profits will become a much easier task. In case you have any questions related to the topic, feel free to pick up the phone and contact Odoo’s customer support team to find out the answer.