Amortizable Item Input Form

This input form is used only with the Amortizable Prepaid Reconciliation Type. This dialog window will appear when you select New in the Amortizable Items section of the Amortizable Prepaid Reconciliation form.

The main elements of the Amortizable Item Input Form window are:

Description - this is your short but descriptive name for the particular item that is going to be amortized.

Amount - enter the total amount that was paid that is going to amortized over a specific time period

Comments - be very specific in this part of the form to include detailed information about the amortizable item. The more items you have to amortize, the more critical it is to be very specific in your comments. If you only have one building on one parcel of land, you know what the property taxes are related to. But will you remember which is the school tax, or the city tax, or the county tax, or the special sewer assessment? And what if you are a real estate developer with 27 individual properties? You can't keep them all straight unless you put lots of detail in the comments area. And... you only have to type them once. They're always there. They will appear on every reconciliation that you prepare during the life of that particular amortizable item.

Open Date - this is the date that the item first appeared in the general ledger. Usually that would be the date the item, in this case property taxes, was paid. If you have a computerized payables system, the Open Date would be the date that the item was entered into the payables system. This is NOT necessarily the date the check was actually written.

Amortization Begin Date - read the details of your documentation carefully!!!! The Amortization Begin Date is based on the period the expenditure relates to. In this example the tax that is being paid is for the calendar year 2004. Somewhere on the tax bill this should be disclosed. In some instances, it is so well disguised that you have to call the taxing authority (or sometimes a mortgage company that allocates property taxes as part of closing and settlement costs in real estate transactions) to find out the actual dates the tax applies to. If you document this carefully, you will never have to find out this information again. It will be included in the Comments area of your Amortizable Item (which was NOT done here) and you can simply use your windows Copy and Paste commands to carry it forward to next year's item. Once you have clearly defined your Amortization Begin Date, you probably now also know the...

Amortization End Date - this would be the end of the period you defined in your adventures searching for the Amortization Begin Date.

IMPORTANT BUTTON - Monthly Amounts. When you click on the Monthly Amounts button the Monthly Amounts - Amortizable Prepaid Item window will open:

The main elements of this window are:

Amount - this is the amount from the Amortizable Item window. You can't change the amount in this window. You would have to go back to the Amortizable Item window to change the amount.

Amortization Schedule - the amounts are automatically filled in using equal monthly amounts based on the Amortization Begin Date and the Amortization End Date entered in the Amortizable Item window. If there are any "partial pennies" as a result of the equal monthly calculation, they are all put into the first month of the amortization schedule - automatically. This area of the window has two columns:

Period End - the dates in the table are always the calendar month end. If you are using accounting periods that do not end on the last day of the month - don't despair. We're working on adapting the table to allow you to change the date, but for now, you're stuck with calendar month ends.
Amount - when you first open this window the predetermined amounts will be shown. If you are a perfectionist and want to change the monthly amounts to reflect the number of days in the month, for example, you can do that. Simply select the month and change the amount. You will be protected from making an error by the next area on the window. The one labeled:
- Balance remaining to be amortized - this window will show you if you've made an error and the total amortization will not equal the total amount paid. Make sure you correct this before you close the window. If you don't, RecWizard will automatically adjust the last period of amortization to make sure you amortize the total cost of the item - and not one penny more. NOTE: You will not see this change until you completely exit the Amortizable Item window and re-open it.
CAUTION: Mid-month Amortization Periods
Click here to go to the instructions below.

Save & Exit button - at last you've finally made it to the end and it's time to click on the Save & Exit button to return to the Amortizable Prepaid Item window which is where this all started at the top of this page.

When you are back at the Amortizable Prepaid Item window, if you are satisfied with your Item and the calculation of its amortization, you can click on the Save & Exit button and go back to the Amortizable Prepaid Reconciliation Type Input Form.

Mid-month Amortization Periods - if you put in dates that indicate the middle of a month as Begin and End dates (such as 1/16/11 to 1/15/12) the RecWizard software will give you an unexpected result. This is because of the general assumptions that are made in calculating the amortization amounts only in full monthly amounts. The solution for these particular dates is as follows:

Use 1/31/11 as the Begin Date (you could also use 1/16/11, but why complicate things more than they already are).
Use 1/31/12 as the End Date
- This will cause RecWizard to calculate amortization over a thirteen month period
Open the Monthly Amounts window and change all of your monthly amortization amounts as you see fit. In this case, if you had a $12,000 tax item you would calculate amortization of $500 in the month ended 1/31/11 and in the month ended 1/31/12. The eleven other months would each be $1,000 per month.
Remember to put the ACTUAL amortization dates in the Comments section when you return to the Amortizable Prepaid Item window. The dates that show up as the Begin and End dates are not the actual amortization dates in this example.

PRACTICAL ALTERNATIVE - amortize the taxes over the twelve months January through December. As long as you are consistent with your amortization every year this will be more than acceptable to your auditor. However - it won't get you a passing grade in your accounting class.