DacEasy Success Stories

Utilizing DacEasy's Fixed Assets Module

General Audio-Visual, Inc.

Our service customers pay for a full year's service contract in advance. We would distort our monthly sales figures if we reported the entire sale amount in the first month of the contract and no sales at all in the subsequent eleven months. Instead, we utilize the Fixed Assets module for generating monthly prorated sales amounts. I hope the following steps will help other people with similar needs.

1. We invoice the customer for the full amount of the service contract. This is so we can print an invoice to send to the customer.
2. In the Receivables Ledger, we credit the full amount of that invoice, using the original invoice number with a suitable suffix (e.g., CR), debiting the original sales account number. We use this as a reminder to solicit the customer to renew their service contract by looking for invoices with the CR suffix on the Receivables Aging report. This also removes the full contract amount from the sales account so we can recognize monthly revenue from the contract sale.
3. On the Edit Fixed Assets screen, we enter the service contract with as much information as we can: Customer, contract period, items covered, etc. As depreciation accounts, we list the number of a liability account called Service Contracts Due Customer in both the Original Value and Depreciation Expense fields. We enter our Service Contract Income account in the Accumulated Depreciation field.
4. On the last day of each month, we generate our fixed asset depreciation, our Service Contract Income account is credited one month's pro-ration and our Service Contracts Due Customer liability account is debited.
5. When the invoice is paid, we reverse the credit issued in Step 2 by entering a debit in the Receivables Ledger and a credit to the Service Contracts Due Customer account. We enter the payment against the original invoice that we had issued in Step 1.

Kenneth LiDonnici, P.E.
Secretary/Treasurer
General Audio-Visual Inc.