In Odoo accounting, deferred expenses, also known as prepaid expenses, represent costs your company has already paid for but hasn’t consumed the benefits of yet. These are recorded as assets on the balance sheet until they are gradually recognized as expenses over the periods they benefit.
Here’s a breakdown of how it works:
Concept:
A deferred expense is an asset on the balance sheet until it’s used or consumed, gradually turning into an expense on the income statement through amortization.
Configuration:
Go to Accounting — Configuration — Settings to define accounts and settings for deferred expenses:
Journal: This journal records the deferral entries.
Deferred Expense Account: This account holds the deferred expense amount until it’s recognized as an expense. It’s a current asset account.
Generate Entries: Odoo can automatically generate deferral entries when posting vendor bills (default) or allow manual creation.
Amount Computation: Choose how the expense is spread over time (e.g., equally per month, based on days).
Creating Deferred Expenses:
There are two ways to create deferred expenses in Odoo 17:
Vendor Bills: When creating a vendor bill for a prepaid expense, enable the deferral option and set the start and end dates for amortization. Odoo automatically creates the deferred expense entry.
Journal Entries: Manually create journal entries using the deferred expense account for the prepaid cost and another account for the payable amount.
Reporting:
Access the deferred expense report at Accounting — Reporting — Deferred Expense. This report provides an overview of deferred expense accounts and allows you to view their journal entries.
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