Configuring Releases: Depreciation, Prepayments, Deferred Revenue

Accounting releases control how and when transactions are recognized in your ledger. Light provides a flexible release framework for managing depreciation, prepayments, deferred revenue, and other amortized items across your organization.

# 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 — 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 (declining balance — higher amounts early, lower later). The reducing balance method is only available for Fixed asset, AP, and JE template types.

Balance sheet account (Contra account): The release template requires a balance sheet account — this is where the full amount is initially parked. For prepayments, this would be a prepaid asset account; for depreciation, a fixed asset account; for deferred revenue, a deferred revenue liability account. When you apply the template to a transaction line, Light automatically moves the entire amount to this balance sheet account and releases it to the expense/revenue account over time.

Currency handling: Release amounts are calculated automatically in the transaction currency, local entity currency, and group currency for each posting — no configuration is 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 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 — the revenue recognition account is selected 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 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 — the expense account is selected 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, fixed assets are entered by applying a Fixed Asset release template to a journal entry, bill, or sales invoice line — there is no separate fixed asset import. The resulting fixed asset register lives at Accounting → Releases: filter the page 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 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 (declining balance): Higher depreciation early, lower later — requires a reducing rate or residual amount
7. Set the Contra account to your accumulated depreciation account — the depreciation expense account is selected on the line when you apply the template
8. 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 recognized
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 automatically moves the entire amount to the balance sheet account configured in the template. The release engine then systematically releases the amount from the balance sheet account to your selected expense/revenue account according to the template schedule.

Important: You do not need to manually book to the balance sheet account. Pick the expense account on the line, assign the template, and Light handles the rest.

# 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 organization should have a release template called "Furniture" configured with:

• Release Type: Accounts Payables
• Duration: 60 months (5 years)
• Pattern: Straight-line
• Balance sheet account: 800800 - Furniture and Assets (this is where the full amount is parked before being released)

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 immediately capitalizes the expense to the asset account (800800 - Furniture and Assets)
3. Each month, Light automatically posts $200 in depreciation expense (12,000 ÷ 60 months)
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)
• Credit: Accounts Payable $12,000 (liability)

Monthly release (repeated 60 times):

• Debit: 500500 - Office Furniture $200 (expense)
• Credit: 800800 - Furniture and Assets $200 (contra asset)

Key concept: On the bill line, you select the expense account (500500) as the GL account. The release template's balance sheet account (800800) is where Light automatically parks the full amount. The engine then releases from the balance sheet account to your expense account over the 60-month period — you don't need to manually book to the asset account.

# Monitoring and adjusting releases

View active releases in the Accounting → Releases dashboard. This is also the fixed asset register — filter the page 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
• Adjust the end date or amount (adjustments create new release entries)
• Monitor progress as a percentage of the total release period
• Print release schedules for audit documentation

Good to know: Once a release has posted entries, you cannot delete it. Instead, create an adjustment release to correct errors or changes.

# Multi-entity release management

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

• Consistent release policies across all subsidiaries
• Centralized template governance

# Related articles

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