Using Amortizations

An amortization is the reduction of the value of an asset by prorating its cost over a period of time. Use amortizations to extend expenses over a predefined period of time. Expenses such as contract maintenance for a building, insurance payments or capital expenditures are examples of occasions to create amortization schedules. You can create amortization schedules to recognize revenue over a predefined period of time. You can set up schedules manually and automatically.

Follow these steps to set up amortizations:

Set the default options on the Service Parameters form.

Follow the steps in Setting Up Amortizations.
Create a new contract with annual Billing Frequency and fixed Billing Type.

Follow the steps in Adding a Contract.
Follow the steps in Adding Contract Lines to add a contract line.
Invoice the contract.

Follow the steps in Invoicing a Contract. The amortization is automatically created during contract invoicing.
The system debits the sales account from the distribution account specified on the contract, and credits the amortization prepaid expense account specified on the Service Parameters form.
Use the Amortization Transaction by Account Report and Outstanding Amortization by Account Report to review details about amortizations.