Spreading an expense over several months

Learn how to amortize an expense such as a prepaid rent over several periods.

How to spread an expense paid upfront

Assume you've paid 12,000 + 15% VAT = 13,800 rent upfront for 1 year and you want to spread the expense over 12 months.

Here's how you'd book it:

1. Create an expense with the following:

   • Select Cash Expense from the side menu.
   • Date: Date you paid the rent upfront.
   • Account: Prepaid Rent. You may want to create this account in your Chart of Accounts.
   • Amount: 13,800
   • Paid through: Bank Account
   • VAT: VAT on Purchases (15%)

2. Spread the expense monthly exclusive of VAT by creating 12 identical expenses for each month:

   • Date: date for each month you want to recognize the expense (e.g. end of each month).
   • Account: Rent. You may want to create this account in your Chart of Accounts.
   • Amount: 1,000 (= 12,000 / 12)
   • Paid through: Prepaid Rent