Amortizing Prepaid Items

You can enter asset items for prepaid items, such as general liability insurance, that will be amortized when you run Depreciation Processing in the Asset Management application.

Having Deltek automatically process amortization for prepaid items through the Asset Management and Equipment hub applications is an alternative to creating recurring journal entries for prepaid items.

You create prepaid items (asset items entered in Deltek) from purchasing items with a category type of Capital Item. To clearly identify prepaid items so that you can exclude them from asset item reports, you should create a separate purchasing item category for prepaid asset items in Settings > Purchasing & Inventory > Company.

Deltek uses the straight-line depreciation method for amortizing prepaid items. In the Equipment hub, you identify an asset item as a prepaid item by selecting Prepaid in the Calculation field on the GL Book tab.

Before You Can Amortize Prepaid Items Using Depreciation Processing

You must complete the following information before you can amortize prepaid items in Depreciation Processing:

Location	What You Must Complete
Purchasing > Purchase Orders or Transaction Center > Transaction Entry (AP Vouchers) or Hubs > Equipment	Create a prepaid asset item in the Equipment hub in one of the following ways: Enter a purchase order that automatically creates the prepaid asset item. Enter an accounts payable voucher that automatically creates the prepaid asset item. Manually create a prepaid asset item directly in the Equipment hub.
GL Cost tab in the Equipment Hub	If the prepaid asset item was automatically created from a purchase order or AP voucher, its cost prefills in the Acquisition Cost grid on the GL Cost tab in the Equipment hub. If you manually entered a prepaid asset item directly in the Equipment hub, enter the acquisition cost for it. The acquisition cost is used to calculate the amortization basis for your GL book and any additional books that you set up. On the Additional Book tab, you can enter additional information to change the amortization basis for additional books.
GL Book tab in the Equipment Hub	Enter the following information: In the Asset Status field, select Active. You cannot run depreciation processing for the prepaid item until it has an active status. In the Calculation field, select Prepaid. The Method field prefills with Straight-line, which you cannot change. The straight-line calculation is: Monthly Amortization Amount = (Prepaid Item Cost – Salvage Value) / Useful Life in Years Value Source Prepaid Item Cost Depreciation Basis field on the GL Cost tab Salvage Value Less Salvage Value field on the GL Cost tab Useful Life in Years Useful Life in Years field on the GL Book tab In the Useful Life in Years field, enter the useful life in years. In the GL Accounts section, general ledger accounts prefill in the Prepaid and Prepaid Expense fields, based on the asset type that you entered in the Asset Type field on the GL Book tab. You can change the accounts as needed. These are the accounts that will be used for the journal entries that are created when you process depreciation for your general ledger (GL Book). These do not apply for additional books entered on the Additional Books tab.
Additional Books tab in the Equipment Hub	If you set up any additional books to calculate depreciation or amortization differently from your general ledger book, entries from the GL Book tab prefill on the Additional Books tab for additional books. You can change some of the prefilled information as needed, and enter additional amounts to affect the amortization basis.

Processing Amortization

Process monthly amortization for your GL book and any additional books in Asset Management > Depreciation Processing.