Problem: How to Cancel Deferred Expense when the service has been discontinued and the company received the refund of remaining amount?
Solution: The reverse of Deferrals is done automatically when you create Debit Note based on the Invoice Received. But if the Deferred Expense has been always recognised with Month and Closing tool and recognised amount exceeds the refund amount you need to create Reversal Entry (Other Expense document) and Register Correction before creating the Debit Note.
Suppose you have the 10.000 AED Rent Service that has been deferred fo 10 month, 6000 AED has been already recognised:
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 Month End Closing Entry. In Accounting Module go to Expense Recognition Documents List and check DR-CR :
Other Expense Reversal Document Should create Vice Versa transaction to Expense Recognition:
2) In order to reflect internal Deferral Reports you need to create Register Correction 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 the content as based on the example in the screenshot below:
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
