Enable Amortization features:
- Accounting Periods [Setup → Company → Setup tasks → Enable features: Accounting subtab]
- Amortization [Setup → Company → Setup tasks → Enable features: Accounting subtab]
- Ensure one or more deferred expense accounts are set up [NetSuite automatically adds a default account with a type of Deferred Expense to the Chart of Accounts because at least one account of this type is required for the feature; For each item that requires amortization, we designate a Deferred Expense type account where expenses are posted according to the generated schedule.]
- Ensure that accounting periods are set up for the range of time your amortization schedules will cover [For example, if we are going to create schedules that extend three years ahead, we need to set up accounting periods through that time]
Setting Amortization Preference [Accounting preferences]:
- USE SYSTEM PERCENTAGE OF COMPLETION FOR SCHEDULES – Check this box to calculate project completion automatically, based on approved time logged against the project. If we clear this box, you must enter the percentage of project completion manually on project records for revenue and expense recognition.
- ALLOW USERS TO MODIFY AMORTIZATION SCHEDULE – Check this box to be able to change the amortization schedule after it is initially created.
- DEFAULT AMORTIZATION JOURNAL DATE TO – Choose to set the default transaction date of amortization journal entries when you open the Create Amortization Journal Entries page.
Select one of the following:- Last Day of Period – The date defaults to the last day of the period you select in the Posting period field.
- Current Date – The date defaults to the current date.
- DEFAULT AMORTIZATION JOURNAL ENTRY FORM – Select the journal entry form to use for amortization journal entries. The options are Standard Journal Entry plus any custom journal entry forms created during implementation.
- NUMBER OF SHORT-TERM EXPENSE PERIODS – Enter the maximum number of short-term expense periods to include in the Deferred Expense Waterfall report. Integers from 0 through 52 inclusive are valid values. The default is 12.
Amortization Templates
These templates are used to generate amortization schedules that determine how costs from associated items and expenses should be posted.
The Permissions – Lists – Amortization schedule controls access to amortization templates.
Amortization templates can be used to generate amortization schedules for items purchased based on the association of templates with items.
We can associate an amortization template with the following item types:
- Non-Inventory for Purchase/Resale
- Other Charge for Purchase/Resale
- Service for Purchase/Resale
You can associate an amortization template with an item on the item record to make it the default on all transactions. When the item is entered on a purchase transaction, the associated template autofill on the transaction line.
Amortization is supported for vendor bill and vendor credit transactions.
After expense and item amounts from bills and bill credits have been posted to deferred expense accounts, these amounts need to be recognized and moved to expense accounts at appropriate intervals.
Amortization schedules provide a basis for the generation of journal entries to post this impact to the general ledger. You can use the Create Amortization Journal Entries page to create journal entries that post deferred expenses. This page lists amounts from all schedules that are due to post. Amortization journal entries for vendor bills typically debit expense accounts and credit deferred expense accounts.
Creating Amortization Template
- Navigate to Lists -> Accounting -> Amortization template -> New
- Create an amortization template by entering details such as name, amortization method, amortization period, term source, deferral account, etc.
