How to Amortize Prepaid Expenses

DualEntry’s amortization module spreads a prepaid expense (an annual insurance premium, a prepaid software subscription, a retainer) over the months it covers. You create an amortization schedule once, and DualEntry generates the monthly journal entries, posts them as their dates arrive, and tracks the remaining balance down to zero.

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Prerequisites

Before you create amortization schedules, confirm the following:

• Your role includes permission to create amortization schedules. See user roles and permissions.
• Your chart of accounts has a prepaid asset account to hold the balance and an expense account to receive each monthly charge.
• To link a schedule to its source, the bill, direct expense, or journal entry that booked the prepaid must already be saved in DualEntry.

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Create an amortization schedule

Create a standalone amortization schedule from the Amortization register when the prepaid has no source transaction in DualEntry, such as an opening balance migrated from another system. The register sits in the sidebar under Amortization, between Fixed Assets and Revenue Recognition. To link a schedule to the bill that booked the prepaid, start from the bill instead; see Create an amortization schedule from a bill or other transaction.

1. Navigate to Amortization and choose New.
2. In Details, choose the Company, enter the Asset Name and Amount, and set the currency and exchange rate. Amortization Amount shows the resulting monthly charge and is read-only.
3. In Lifetime, enter the Useful Life, choose Month or Year as the Period, and enter the Amortization Start Date.
4. For a mid-life schedule, in Accumulated Balance, enter the Accumulated Beginning Balance (the amount already amortized before this schedule existed) and Accumulated Through (the date that catch-up covers).
5. In Accounts, choose the Account that holds the prepaid balance, the Amortization Expense Account debited each month, and the Accumulated Amortization Account credited each month, all from your chart of accounts.
6. Optionally choose a Vendor or Customer, add classifications, and attach supporting documents.
7. Save as draft to review the schedule first, or post it directly.

After you post, DualEntry generates the monthly entries described in Posting behavior and statuses. Validation protects the schedule math: the amount cannot be zero, the accumulated beginning balance must carry the same sign as the amount and be smaller than it, and the accumulated-through date must fall within the useful life.

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Create an amortization schedule from a bill or other transaction

Link an amortization schedule to its source transaction by creating the schedule from the transaction line, not from the amortization form. The amortization form has no source bill field: the only way to link a schedule to a bill, direct expense, or journal entry is the Create amortization action on one of its lines.

1. Open the saved bill that booked the prepaid. The action is not available on a bill that has not been saved yet.
2. On the Expenses tab, open the more actions menu (⋮) at the end of the prepaid line and choose Create amortization.
3. Review the new amortization form. A Related record banner at the top of Details names the source, for example Create amortization from BI-1001.
4. Choose the Amortization Expense Account and enter the Useful Life, then adjust any prefilled values.
5. Save as draft or post the schedule.

DualEntry fills the form from the source line:

• Company comes from the line or the bill, and is locked.
• Asset Name is the bill number followed by the line description.
• Amount is the line’s rate multiplied by its quantity.
• Memo, currency, exchange rate, classifications, and attachments come from the bill and line.
• Amortization Start Date is the bill date.
• Account and Accumulated Amortization Account are both set to the line’s account, the prepaid asset the bill was booked to.

If you leave Vendor or Customer blank, DualEntry copies it from the line or the bill when you save. The same action works on lines of a saved direct expense, and on lines of a saved journal entry, where Amount is the line’s debit or credit. The line menu also offers Create fixed asset; see Fixed Assets. If Create amortization does not appear in the line menu, save the bill first: the action shows only on saved records. Each schedule links to one source line, and you cannot attach a source to a schedule after creating it. If an existing standalone schedule is still a draft, archive it and create a new schedule from the bill line. A posted standalone schedule cannot be relinked; leave it in place, because a new schedule from the same line would amortize the already-posted months a second time. Once linked, the schedule’s Related tab shows the source bill or direct expense, and the bill’s Related tab lists every schedule created from its lines. If the source bill came from Brex, make any corrections on the DualEntry bill, not in Brex. Re-editing a synced bill in Brex can overwrite the bill and duplicate the line linked to your schedule; see Edit Brex bills in DualEntry after sync.

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How amortization schedules work

An amortization schedule is the record that defines how a prepaid balance is spread over time, and DualEntry keeps one per prepaid item on the amortization register. Each schedule has its own number (prefixed AMS#). It carries the original amount, a useful life (entered in months or years and stored in months), a start date, and three GL accounts. The three accounts are the asset account that holds the prepaid balance, the account debited by each monthly entry (typically the expense account), and the account credited (typically the prepaid asset account itself or an accumulated amortization account). Amortization is straight-line and monthly. DualEntry divides the amount to amortize by the number of remaining months and generates one entry per month on the anniversary day of the start date. Any rounding remainder is absorbed into the final month, so the schedule always amortizes to exactly zero. Schedules you adopt mid-life are supported through two catch-up fields. Accumulated beginning balance records how much was already amortized before you created the schedule in DualEntry, and Accumulated through records the date that catch-up covers. DualEntry then amortizes only the remaining balance over the remaining months, starting the month after the accumulated-through date. Schedules can optionally link to a vendor or a customer for register filtering and reporting, carry classifications for dimensional reporting, and hold file attachments such as the underlying contract.

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Posting behavior and statuses

Once a schedule is posted, DualEntry generates the full run of monthly amortization entries up front. Entries dated in the past or current month post immediately; future-dated entries wait as drafts and post automatically when their date arrives. Each posted entry is a standard journal entry pairing the debit and credit accounts on the schedule, and a Drafts tab on the register lets you review upcoming entries before they post. The register tracks two layers of status. The record status is the standard draft, posted, or archived lifecycle. The schedule status describes the business state: The register shows the amortized amount and the remaining balance per schedule, alongside a schedule table and chart on each record’s detail view.

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Stop, terminate, or archive a schedule

A schedule does not have to run to completion. The Terminate action stops amortization from a date you choose (it defaults to today): DualEntry archives every generated entry dated on or after that date and sets the schedule to Inactive, leaving already-posted history untouched. You can also archive a single monthly entry when one period needs manual correction, or archive the whole schedule while it is still a draft. Terminate is available on posted schedules only, and a Disposed schedule cannot be terminated. Termination does not touch what already posted, so the schedule’s history remains intact for the months before the stop date. Archived amortization entries support a recover action, so an entry archived by mistake can be restored from the archived list rather than re-created by hand.

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Import and export schedules

Bulk operations cover both directions. The bulk import record type Amortizable assets loads schedules from a CSV, with columns for company, name, amount, currency and exchange rate, useful life, amortization method, the catch-up fields, the three account numbers, an optional customer name, and status. Two limits are worth knowing: the import template links schedules to customers but not to vendors (link vendors on the record after import), and amortization schedules do not support custom fields. The register exports to Excel with every schedule field plus resolved account names and numbers, the computed amortized amount, and the remaining balance, which makes the export a ready-made prepaid roll-forward for month-end close. For reconciling the prepaid asset account against that roll-forward, see the workpaper flow in reconciliation.