Prepaid amortization
Moving a prepaid asset into expense a little at a time as you use the service you paid for in advance.
In Solo Superstars
Open Accounting › Prepaid amortization. The page first shows every existing schedule. Choose Add schedule to open the setup form without leaving the list.
Start with Source journal entry. It lists unlinked journal-entry debit lines posted to a prepaid asset account. Selecting one connects the schedule to that exact journal entry and fills the prepaid account, available amount, schedule name and first amortization date. Confirm the expense account, number of months and first date before saving.
Review before posting leaves due entries for you to post with Catch up through. Post automatically lets the daily accounting job create each due monthly journal entry on or after its scheduled date. Each installment is posted only once, even if the job retries. Year-end adjustments shows this as a checkpoint and links back here; schedule setup belongs in Accounting because it runs throughout the year.
Under accrual accounting, the original payment increases a prepaid asset rather than recording the whole amount as expense immediately. A cash-basis business, or a business applying a reasonable materiality policy to a small amount, may expense it when paid instead and would not need this schedule.
Example
Original payment — March
You pay 1,200 from Checking for 12 months of insurance:
| CoA | Account | Class | Debit | Credit |
|---|---|---|---|---|
1400 | Prepaid Expenses | Assets | $1,200 | — |
1010 | Checking | Assets | — | $1,200 |
Checking decreases, but Insurance Expense does not yet increase.
Monthly amortization — each month
| CoA | Account | Class | Debit | Credit |
|---|---|---|---|---|
6050 | Insurance | Expenses | $100 | — |
1400 | Prepaid Expenses | Assets | — | $100 |
After 12 months, Prepaid Insurance is zero and a total of 1,200 has moved into Insurance Expense.
Codes shown are the defaults a new workspace starts with. Yours may be renamed or renumbered — check Accounting › Chart of accounts. See the full default chart.
Also called
- prepaid expense amortization
- prepaid release
Related
- Prepaid expense — Something you paid for ahead of time, like annual insurance. Sits as an asset and is released to expense month by month.
- Prepaid schedule — The plan that releases a prepaid amount to expense evenly over its months, posting an adjusting entry each period.
- Adjusting entry — A journal entry made at period end to fix timing: an accrual, a prepaid release, depreciation. Not tied to a bill or invoice.