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Deferrals register

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Separate Deferrals functionality is used to account for deferred expenses in the system. This functionality enables an unlimited number of models to be used to account for deferrals. You can keep parallel tax accounting and bookkeeping accounting of deferrals.

Deferrals are generated in the following places:

  • Manually on the Deferrals page.
  • Automatically from other modules in Microsoft Dynamics 365 Finance. For example, deferrals are automatically generated when you sell depreciable assets at a loss or account for standard expenses amounts above the norm.

Deferrals are automatically written off in each period. The write-off amount is determined based on the write-off period and the deferral amount.

Here are some examples of deferrals:

  • Losses that are incurred by a taxpayer in a tax period. These losses can be transferred to subsequent tax periods within 10 years. The total amount of the transferred loss must not exceed 30 percent of the tax base.
  • Expenses for research work or experimental development. These expenses are evenly included in other expenses for three years from the first day of the month after the month when the research was completed.
  • Loss on the sale of depreciable property.

Deferrals setup

For more information about how to set up deferrals, see Set up deferrals (Russia).

Set up deferral creation when you sell fixed assets

When you sell fixed assets at a loss in bookkeeping accounting and tax accounting, a deferral must be created for the amount that is lost from the sale. To create a deferral automatically, follow these steps before you sell a fixed asset.

  1. Go to Fixed assets (Russia) > Common > Fixed assets. In the master record for the fixed asset, on the Action Pane, select Value models.

  2. Select a TAX value model.

  3. On the Deferrals FastTab, select Add to add a line, and set the following fields:

    • In the Model number field, select a TAX model for deferrals accounting.
    • In the Deferrals group field, select a deferrals group.
    • In the Expense code field, select an expense code.

You can also set up automatic creation of deferrals for the depreciation group of fixed assets.

  1. On the Depreciation groups page, select a TAX value model and a depreciation group.
  2. On the Deferrals FastTab, add a line, and set the fields that are described in the previous procedure. When you create value models in the fixed asset master record, the Deferrals FastTab is automatically filled in.

Deferrals register

The deferrals register is created to summarize information about expenses that can be included in expenses for tax purposes in future periods. These expenses are known as deferred expenses.

Register entries are made when the deferral is created or is written off.

You should organize analytical accounting of deferrals for each object (fixed asset, research work, or experimental development) and each expense type that cause a deferred expense to be created. This organization ensures that the deferrals register lines that are created have the same level of analytical accounting.

The information that is required to create the register is stored in the deferrals master record. (This information includes the creation date of the deferral, the expense code, the deferral amount, the write-off period, and the write-off amount for the period.) The register contains information about all the deferrals that haven't yet been written off in the period that the register is created for.

The register calculates the total for each expense code. The register totals are used to calculate totals for revenue and expense codes.

The register lines show the following information:

  • Line number
  • Transaction date – The date of the deferral transaction.
  • Expense type – The expense code that is assigned in the transaction.
  • Expense code – The description of the expense code in the transaction.
  • Object name – The name of the deferral.
  • Deferrals sum – The amount of the deferral.
  • Term of deferral's write-off – The period of the deferral write-off.
  • Monthly amount – The monthly amount of the deferral write-off.
  • Date begin account – The start date of accounting for the deferral.
  • Amount of months – The number of months when there was a posted write-off transaction, up through the current month.
  • Writing-off sum – The write-off sum for the deferral in the current register.

Set up the deferrals register

Set up the deferrals register by following the instructions in the article, Create tax registers and the tax register journal. In the Register type field, select Deferrals.

Examples

The following two examples use the RUMF company:

  • Deferrals are automatically created when fixed assets are sold at a loss
  • Deferrals are automatically created by using a periodic task

Example: Deferrals are automatically created when fixed assets are sold at a loss

  1. On the Deferrals groups page (General ledger > Deferrals), create the following deferrals group.
Deferrals group Model number Write-off method Write-off time Beginning date of write-off Disposal date
Yearly TAX Linear 12 Creation date start Year end
  1. On the Expense and income codes page (Tax > Setup > Profit tax > Expense codes), verify that the following expense codes are created.
Expense code Code type Parent code Sales tax code
902000000 Issue НП
902030000 Issue 902000000 НП
  1. On the Depreciation groups page (Fixed assets (Russia) > Setup > Depreciation groups), create the following depreciation group that uses the TAX value model.
Depreciation group Depreciation method Value model Depreciation start date
FA loss Linear TAX Next month start
  1. On the Deferrals FastTab, create the following line.
Model number Deferrals group Expense code
TAX Yearly 902030000
  1. On the FA groups page (Fixed assets (Russia) > Setup > FA groups), create the following fixed asset (FA) group.
FA group Name
Inventory Inventory
  1. On the Released products page (Product information management > Products > Released products), create the product. In the Fixed assets (Russia) section, in the FA group field, select the fixed asset group that you just created.
Product number Product name FA group
Inventory01 Inventory01 Inventory

  1. On the Tax registers page (Tax > Setup > Profit tax > Registers), create the following registers:

    • FA – information about object

    • FA depreciation

    • FA/IA sale, Deferrals

      For each register, on the Hide FastTab, select the fields that should be hidden from the register.

  2. On Fixed assets page (Fixed assets (Russia) > Common > Fixed assets), create the following fixed asset.

FA group Number Acquisition date Acquisition cost
Inventory 4051 01/01/2019 300,000.00
  1. Add the TAX value model for the fixed asset. On the General FastTab, set the following fields.
Value model Depreciation group Putting into operation amount
TAX FA loss 300,000.00
  1. Make sure that the Deferrals FastTab has the following line.
Model number Deferrals group Expense code
TAX Yearly 902030000
  1. Create the fixed asset journal for putting into operation, and do the putting into operation proposal, using January 1, 2019 (1/1/2019) as the transaction date. Then post the journal.
  2. Create the fixed asset journal for depreciation, and do the depreciation proposal, using April 1, 2019 (4/1/2019) as the transaction date. Verify that the following lines have been created.
Accounting Date Account type Account Description Credit
RAP 2/1/2019 Fixed asset 4051 Depr. by 2/28/2019 25,000.00
RAP 3/1/2019 Fixed asset 4051 Depr. by 3/31/2019 25,000.00
TAX 2/1/2019 Fixed asset 4051 Depr. by 2/28/2019 25,000.00
TAX 3/1/2019 Fixed asset 4051 Depr. by 3/31/2019 25,000.00
  1. Post the journal.
  2. On All sales orders page (Accounts receivable > Orders > All sales orders) create a sales order that has the following line:
Item number Quantity Unit price FA inventory number
Inventory01 1 200,000.00 4051
  1. Switch to the Header view, and then, on the Financial dimensions FastTab, in the ExpenseAndIncomeCode field, select 902030000. In the Invoice date field, select 3/31/2019.
  2. Post the invoice.
  3. On the Deferrals page (General ledger > Deferrals), verify that the deferral master record was created.
  4. Make sure that the Deferrals models page has the following line.
Model number Deferrals group Beginning date of writing off Deferrals sum
TAX Yearly 3/31/2019 50,000.00
  1. Switch to the General view. You should see that the value in the Writing off time field equals the remaining lifetime of the fixed asset. Note that 50,000.00 = 300,000.00 – 25,000.00 × 2 – 200,000.00.
  2. Create the tax register journal for one month of the 2019 calendar year, calculate all registers, and then approve the journal. Repeat this step for two months of the 2019 calendar year.
  3. Create the tax register journal for three months of the 2019 calendar year, and calculate all registers. In the Deferrals register, you should see the following information.
Column Value
Transaction date 3/31/2019
Expense type 902030000
Expense code «Прочая амортизация ОС линейным методом» (ENU: «Other FA depreciation using linear method»)
Object name Disposal FA # 4051 on 3/31/2019
Deferrals sum 50,000.00
Term of deferral's write-off 10
Monthly amount -5,000.00
Date begin account 3/31/2019
Amount of months 1.00
Writing-off sum -5,000.00
  1. Approve the journal.
  2. Create the tax register journal for four months of the 2019 calendar year, and calculate all the registers. In the Deferrals register, you should see the same line that you saw in the Deferrals register for three months. However, the Amount of months field will be set to 2.00 instead of 1.00.

Example: Deferrals are automatically created by using a periodic task

  1. Go to General ledger > Deferrals setup > Value models, and verify that the following value models and deferral groups are created.
Model number Deferrals group Write-off time Beginning date of write-off
RAP 1 6 Creation date start
TAX Yearly 12 Creation date start
  1. On the Standard expenses sequence page, create the following sequence.
Sequence Description Channel Channel reference
AutDef Automatic deferral creation Deferral 1,Yearly
  1. On the Action Pane, select Counters.
  2. On the Counter setup page, create a sequence. In the upper pane, in the Expense code field, select 902010100, and then, on the Lines FastTab, create the following lines.
Line number Operator Line type Period types Output
1 Quantity No
2 * Price No Data output
  1. Go to Accounts payable > Invoices > Invoice journal, and create a journal.
  2. On the Action Pane, select Lines, set the following fields, and then post the journal.
Column Value
Date 1/1/2019
Account type Vendor
Account RUMF-000002
Invoice 0007
Description «Расходы перечисление» (ENU: «Expenses transfer»)
Credit 10,000.00
Currency RUB
Offset account type Ledger
Offset account 97.120-902010100

  1. On the Deferrals creating page, on the Action Pane, select the sequence of calculation that you created, and then select Calculate marked.

  2. On the Parameters FastTab, set the following fields:

    • In the Start date field, select 1/1/2019.
    • In the End date field, select 1/31/2019.
    • Set the Preview option to Yes.

  3. Select OK, and then, on the page that appears, set the Name field to «Расходы перечисление» (ENU: «Expenses transfer»).

  4. On the Action Pane, select Create deferrals, and then, on the Deferrals page, verify that the deferral master record was created.

  5. Make sure that the Deferrals models page has the following lines.

Model number Deferrals group Beginning date of write-off Deferrals sum
RAP 1 1/1/2019 10,000.00
TAX Yearly 1/1/2019 10,000.00
  1. On the Deferrals journal page, create a new journal, and then, on the Action Pane, select Lines.
  2. On the Journal voucher page, on the Action Pane, select Group operations > Writing off.
  3. On the Deferrals writing off page, in the Transaction date field, select 3/1/2019, and then select OK.
  4. Verify that two lines were created for the TAX value model. For both lines, the operation type should be Writing off, and the amount should equal 10,000.00 ÷ 12 = 833.33. When you've finished, post the journal.
  5. Create the tax register journal for one month of the 2019 calendar year, and then calculate all the registers. In the Deferrals register, you should see the following information.
Column Value
Transaction date 1/1/2019
Expense type 902010100
Expense code «Прямые расходы на производство (сырье и материалы)» (ENU: «Direct production expenses (raw and materials)»)
Object name «Расходы перечисление» (ENU: «Expenses transfer»)
Deferrals sum 10,000.00
Term of deferral's write-off 12
Monthly amount -833.33
Date begin account 1/1/2019
Amount of months 1.00
Write-off sum -833.33
  1. Approve the journal, and then create the tax register journal for two months of the 2019 calendar year.
  2. Calculate the registers. In the Deferrals register, you should see the same line that you saw in the Deferrals register for one month. However, the Amount of months field will be set to 2.00 instead of 1.00.