Problem: How to Cancel Deferred Expense when the service has been discontinued and the company received the refund of the remaining amount?
Solution: The reverse of Deferrals is done automatically when you create a Debit Note based on the Invoice Received. But if the Deferred Expense has always been
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recognized with the Month and Closing tool and the recognized amount exceeds the refund amount, you need to create Reversal Entry (Other Expense documents) and Register Correction before creating the Debit Note.
Suppose you have the 10,000 AED Rent Service that has been deferred for 10 months, 6000 AED has been already recognized:
But you need to refund 5000 AED and while creating Debit Note for Goods Return (or Invoice Correction) you'll receive the error:
1) In order to Reverse the Recognised Deferred Expense you need to create Other Expense Reversal :
Transaction Type - Reversal
In order to identify the GL accounts that should be entered in Other Expenses, you can check GL accounts that were selected in the Month End Closing Entry. In Accounting Module go to Expense Recognition Documents List and check DR-CR :
The 1st screenshot is the entry created when Month end had automatically transferred from deferred expense balance to Other administrative expenses as Expense recognition.
after Other Expense Reversal Document is created the Vice Versa transaction/reversal happens to Expense Recognition:
2) In order to reflect internally in the Deferral Reports you need to create Register Correction in additionally to Other Expense.
Go to Administration - Register Correction - Create a new one:
In Register Content Settings in Accumulation Register Tab select Deferred Expense
Fill in the content based on the details you will find in the expense recognition entry at the bottom of the GL created.
You will just need to add the receipt in case the place of the register records type and the rest should be the same as the entry in Accumulation Register "Deferred Expenses":
Period - Reversal Period, it should correspond with Other Expense Reversal Date
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Manual - Copy from the screenshot above (from Expense Recognition)
3) By entering above transaction Deferred Expense balance has been changed:
And now you can post Debit Note
Debit Note will Create following Transactions:
Deferred Expense balance will be 0
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