Prepaid Property Tax

This account reconciliation is an Asset account type and an Amortizable Prepaid reconciliation type. This type of reconciliation is used when you are paying a for an item in one accounting period, and expensing it over several future accounting periods. The most common type of expense of this sort would be property taxes. They are usually paid in advance for the whole year. Some taxing authorities may require quarterly or semi-annual payments, but the procedure is the same as for an annual tax payment.

In this example, the balance in the General Ledger is being matched with net amount remaining for two different property taxes that are paid by the company.

Note the detailed description above that specifies what activity to expect in this account and what the amortization periods should be for consistency with prior years.

The reconciliation has been Prepared, Approved and Reviewed as noted by the appropriate staff members. The supporting document, the Lease Agreement, has been attached to this reconciliation.

The key to setting up the items to be amortized is the Amortizable Prepaid Item window. Below is the item for the Millersville Consolidated School District Tax property taxes for the year July 2010 thru June 2011 that were paid on June 15, 2010.

Note that the Comments section has additional information about the specific property that is being taxed. You can put as much information as you like in this area. If you have the property tax bill in front of you while you are completing this item then we recommend being as complete as possible. The Amortization Begin Date and the Amortization End Date are based on the actual dates the taxing entity specified in their tax bill. There is also a supporting document that is part of this amortizable item - the Millersville Tax Bill.

After the window has been completed, the Monthly Amounts to be amortized must be set up. The window to do that is shown here. It is accessed by clicking on the Monthly Amounts button.

The amounts to be amortized are automatically calculated based on the information entered in the Amortizable Prepaid Item window. These amounts can be changed manually, if necessary. You will be advised that there is a "Balance remaining to be amortized" if the amounts you enter do not total to the amount being amortized.

The final reconciliation report will look like this.

This particular account is reconciled with no Unidentified Difference.

Return to TOP