MPA (Multiple period accounting) allows you to have a single transaction that can have accounting created into multiple periods in the future, when the periods open.
John prepays $3,000.00 for season tickets to the Chicago Cubs in June of 2008. The accrual journal entry to record the entire prepayment of $3,000 will be created with General Ledger date of today, i.e. 20-JUN-2008. However, the monthly ticket expense is to be recognized during the ensuing three months as the game are played as follows
• $1,000.00 in July ( .500 not bad)
• $1,000.00 in August ( .600 but lost to SF Giants UGH!)
• $1,000.00 in September (out in round 1 of world series, bigger UGH!)
Each subleder journal line type (JLT) can be flagged as a multiperiod line type in SLA and can be further delineated as an accrual line or a recognition line. This setup in SLA allows the accounting setups to take advantage of three fields on the Payables invoice line – Deferred Accounting Enabled, Deferred Start and Deferred End Date. In this example, the entry recorded upon validation of the invoice would represent the initial accrual:
Dr. Prepaid Expenses $3,000 (Asset)
Cr. Accounts Payable $3,000 (Liability)
When the accounting process is run and Subledger Accounting is invoked, we will see that one recognition entry is created for July, August and September. As stated above, the number of periods in the future that the expense is to be recognized is designated on the invoice line in Payables:
Dr. Baseball Expense $1,000 (Expense)
Cr. Prepaid Expenses $1,000 (Asset)
Over the three-month period the prepayment asset balance will be fully liquidated and the full expense will have been recognized.
