Configuring Releases: Depreciation, Prepayments, Deferred Revenue

Accounting releases control how and when transactions are recognised in your ledger. Light provides a release framework for managing depreciation, prepayments, deferred revenue, and other amortised items across your organisation.

# What is this page about

This page covers release templates in detail: what each field does, how to build templates for deferred revenue, prepayments, and depreciation, which accounts each type posts to, and a worked depreciation example with the full double entry. Read it when you are setting templates up rather than just applying them.

On this page

• Understanding accounting releases
• Release template components
• Setting up deferred revenue releases
• Setting up prepayment releases
• Setting up depreciation releases
• Applying releases to transactions
• Example: Depreciating office furniture
• Monitoring and adjusting releases
• Multi-entity release management
• Related articles

# Understanding accounting releases

An accounting release is a rule that breaks down a single transaction into multiple ledger entries across time. Rather than recording an amount entirely in one period, releases spread recognition according to a defined schedule.

Release templates define the pattern. When you apply a template to an invoice line, Light generates the full release schedule at the moment the document is posted, as a set of ledger entries dated monthly across the specified period.

# Release template components

Each release template includes:

Default duration: The length of time over which the release occurs. Entries post monthly, so a 12-month release creates 12 individual ledger entries. When applying a template to a line, the start and end dates you set determine the actual period.

Release method: How the amount is distributed. Light supports straight-line (equal portions each month, with partial adjustment for partial first and last months) and reducing balance, meaning a declining balance with higher amounts early and lower later. The reducing balance method is only available for Fixed asset, AP, and JE template types.

Balance sheet accounts: Most template types use a single Contra account, which is where the full amount is initially parked. For prepayments this is a prepaid asset account, and for deferred revenue a deferred revenue liability account. When you apply the template to a transaction line, Light moves the entire amount to that account and releases it to the expense or revenue account over time.

Fixed asset templates use two accounts instead. The Additions Account holds the gross cost of the asset and stays untouched once capitalised. The Depreciations Account is your accumulated depreciation account, credited each month as the asset depreciates. Together with the expense account on the document line, a fixed asset release touches three accounts rather than two.

Currency handling: Release amounts are calculated automatically in the transaction currency, local entity currency, and group currency for each posting, with no configuration required.

# Setting up deferred revenue releases

Deferred revenue (also called unearned revenue) occurs when you receive payment before delivering goods or services. Create a release template by:

1. Navigate to Settings (gear icon) → Records → Releases templates
2. Click Create release template
3. Enter a template name (e.g., "12-Month Deferred Revenue")
4. Set the template Type to AR (sales invoices)
5. Define the default duration (12 months for annual contracts)
6. Select Straight-line for monthly recognition
7. Set the Contra account to your deferred revenue liability account. You select the revenue recognition account on the invoice line when you apply the template
8. Save the template

Tip: Use descriptive template names that include the duration and purpose, such as "24-Month SaaS Deferred Revenue" or "3-Year Prepaid Maintenance".

# Setting up prepayment releases

Prepayments are amounts paid for future goods or services not yet delivered. Create a prepayment release template similarly:

1. Navigate to Settings (gear icon) → Records → Releases templates
2. Click Create release template
3. Enter a template name (e.g., "Annual Prepaid Expenses")
4. Set the template Type to AP (bills)
5. Define the default duration
6. Set the Contra account to your prepaid asset account. You select the expense account on the bill line when you apply the template
7. Save the template

# Setting up depreciation releases

Fixed assets lose value over time through use and obsolescence. In Light, you enter fixed assets by applying a Fixed Asset release template to a journal entry, bill, or sales invoice line. The resulting fixed asset register lives at Accounting → Releases, where you filter by Fixed asset type to view only fixed assets.

Depreciation templates allocate the asset cost systematically:

1. Navigate to Settings (gear icon) → Records → Releases templates

2. Click Create release template

3. Enter a template name (e.g., "5-Year Straight-Line Depreciation")

4. Set the template Type to Fixed asset

5. Define the default duration to match the useful life (5 years = 60 months)

6. Select the release method:

   • Straight-line: Equal depreciation each period
   • Reducing balance: Higher depreciation early, lower later, with the percentage set by the reducing rate field

7. Set the Additions Account to the fixed asset account that will hold the asset's cost

8. Set the Depreciations Account to your accumulated depreciation account. You select the depreciation expense account on the line when you apply the template

9. Save the template

# Applying releases to transactions

Once templates are configured, apply them when entering transactions:

1. Create a new AP, AR, or JE document
2. On each line, select the expense account (or revenue account) as the GL account. This is where the amount will ultimately be recognised
3. Select the appropriate release template
4. Specify the start and end dates for the release

How it works: When you post the transaction, Light moves the entire amount to the balance sheet account configured in the template, which is the Contra account, or the Additions Account on a Fixed asset template. The release engine then releases the amount to your selected expense or revenue account according to the template schedule.

Important: Pick the expense account on the line, assign the template, and Light handles the balance sheet postings for you.

# Example: Depreciating office furniture

This example shows how to record a $12,000 office furniture purchase with a 5-year useful life and no salvage value.

Step 1: Ensure your release template exists

Your organisation should have a release template called "Furniture" configured with:

• Release Type: Fixed asset
• Duration: 60 months (5 years)
• Pattern: Straight-line
• Additions Account: 800800 - Furniture and Assets, which holds the asset's cost
• Depreciations Account: 800900 - Accumulated Depreciation, credited each month

Step 2: Enter the bill

Navigate to Spend management → Bills and click + Create bill. On the bill line item:

What happens when you post this bill:

1. Light creates the accounts payable liability for $12,000
2. The release template capitalises the cost to the Additions Account (800800 - Furniture and Assets)
3. Each month, Light posts $200 in depreciation expense (12,000 ÷ 60 months) and credits accumulated depreciation
4. After 60 months, the asset is fully depreciated with a book value of $0

The accounting entries:

Initial posting (when bill is posted):

• Debit: 800800 - Furniture and Assets $12,000 (asset cost)
• Credit: Accounts Payable $12,000 (liability)

Monthly release (repeated 60 times):

• Debit: 500500 - Office Furniture $200 (depreciation expense)
• Credit: 800900 - Accumulated Depreciation $200 (contra asset)

Key concept: On the bill line, you select the expense account (500500) as the GL account. Light posts the asset's cost to the template's Additions Account (800800) and credits the Depreciations Account (800900) each month. The gross cost stays visible in 800800 while accumulated depreciation builds up separately, which is what gives you a book value on the fixed asset register.

# Monitoring and adjusting releases

View active releases in the Accounting → Releases dashboard. This is also the fixed asset register, where you filter by Fixed asset type to see only fixed assets and their depreciation schedules. The dashboard shows all pending and completed releases, their progress, and book values. You can:

• View the release schedule and book value chart
• Monitor progress as a percentage of the total release period
• Export release schedules to CSV for audit documentation

The release detail view shows the schedule for reference, so make changes on the source document rather than here.

Good to know: To correct a release, reverse or edit the source document. Light regenerates the release entries from it, since each release is derived from its source document's ledger line.

# Multi-entity release management

For multinational organisations, release templates are defined at the company level and shared across all entities. This allows:

• Consistent release policies across all subsidiaries
• Centralised template governance

# Related articles

• Revenue recognition rules overview
• Accruals, prepayments, deferred revenue, and depreciation
• Fixed asset register
• Multi-currency revenue recognition