# Spread a prepaid cost or income

Record a year of rent paid in advance, or a retainer billed up front, as a deferral that moves one share to expense or revenue at the end of each month.

Some amounts belong to several months: a year of office rent paid in advance, a professional insurance premium, a research database licence, or an annual retainer billed to a client before the work is done. A deferral holds the amount on a balance sheet account and moves one share of it to expense or to revenue at the end of each month. It is recorded in the same list as the assets, with the **Type** that says which side it is on.

## Before you start {#before-you-start}

- You need the **Administrator** access right on **Accounting**.
- The accounting app can also spread a single bill or invoice line that carries a start and an end date, through the deferred entries of [Accounting settings](/docs/accounting-start-here/accounting-settings#deferred). Use a deferral record here when you want a record of its own: a schedule you can read, pause or change, and an early write-off when the contract ends sooner.

## Record a prepaid expense {#prepaid-expense}

1. Open **Accounting/Accounting/Assets & Liabilities/Assets & Deferrals** and click **New**.
2. Type the **Asset Name**, *Deferral demo: Office rent* in the example, and choose a template in the field **Select a template to auto-fill settings...**: type *Prepaid Rent* and choose the prepaid rent template (twelve months). The template sets the **Type** to **Deferred Expense**, the **Category** and the twelve monthly entries.
3. Enter the **Original Value**, the amount paid: 24,000.00. Set the **Acquisition Date** to the first day the payment covers, since the entries follow the months from that date.

![The prepaid rent template turns the record into a deferred expense over twelve months.](https://jaah.app/web/image/11009-f6236fdb/fixed-assets-deferral-deferral_type-en.png)

4. Open the **Accounting** tab. For a deferred expense, **Prepaid Expense** is the asset account where the amount waits, and **Expense** the account each month charges; the **Journal** comes from the template.

![The prepaid amount waits on Prepaid Expense and moves to Expense month by month.](https://jaah.app/web/image/11017-f6fd5dcf/fixed-assets-deferral-deferral_accounts-en.png)

5. Click **Save manually**, then choose **Confirm** in the **Actions** menu. The record becomes **Running**.
6. Open the **Schedule** tab: twelve entries, 2,000.00 for each whole month, each dated the last day of a month, with the reference *Expense Recognition: Deferral demo: Office rent*. Each one debits **Expense** and credits **Prepaid Expense**. When the start date falls in the middle of a month, the first entry covers only the remaining days of that month and the last entry takes the rest.

![Twelve recognition entries, one at the end of each month.](https://jaah.app/web/image/11022-c5723be6/fixed-assets-deferral-deferral_schedule-en.png)

## Record income received in advance {#deferred-revenue}

Follow the same steps with a deferred revenue template, such as the service contract template (24 months), or set the **Type** to **Deferred Revenue** yourself. The **Accounting** tab then shows **Deferred Revenue**, a liability account that holds what is not yet earned, and **Revenue**, the income account each month credits. The entries carry the reference *Revenue Recognition* and debit **Deferred Revenue**.

A deferral uses no depreciation account; leave its **Salvage Value** at zero so that the whole amount is spread. Its **Prior Recognition** field, in the **Depreciation Method** tab, takes what was already recognised before the record was entered.

## FAQ {#faq}

### Which journal does a deferral without a template use? {#journal}

A new record starts with the [Depreciation Journal](fixed-asset-settings#depreciation-journal), and changing its **Type** does not replace it: choose the journal yourself on the **Accounting** tab. The shipped deferral templates bring their own journals, **Deferred Expense** and **Deferred Revenue**.

### The contract ended early. How do I recognise the rest at once? {#early}

Open the record and use **Adjust** with **Sell / Dispose / Write-off**: the whole remaining balance is recognised in one entry. See [Sell or dispose of an asset](sell-or-dispose-of-an-asset).

### The expense account of a template looks wrong. {#template-account}

The templates' accounts were guessed from the chart of accounts at installation. Change them on the record before you confirm it, and correct the template as shown in [Fixed asset settings](fixed-asset-settings).

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- Source: https://jaah.app/docs/fixed-assets/spread-a-prepaid-cost-or-income
- Updated: 2026-10-23
- Version: Fixed assets 19.0.1.5.0
- Verified: 2026-10-23