Cost Amortization Rules
Amortized costs and net amortized costs reflect the amortization of original costs on a daily basis. The following rules apply to cost amortization:
Bill Amount and Amortized Amount
For details, see Bill Amount and Amortized Amount
Pay-per-Use Resources
- If the time when a pay-per-use resource started being used (the first time expenditures were incurred) and the transaction time (when the amount due was paid) are in the same billing cycle, the amortized cost is recorded for the day when it started being used.
Example: Suppose you used a pay-per-use resource from June 10, 2021 23:00:00 to June 10, 2021 23:59:59, the transaction time was June 11, 2021 00:53:30, and the amount due was $2 USD.
Cost amortization: As the time when expenditures were incurred (June 10, 2021 23:00:00) and the transaction time (June 11, 2021 00:53:30) were in the same billing cycle, the amount due ($2 USD) was recorded as the amortized cost for June 10, 2021.
- If the time when a pay-per-use resource started being used (the first time expenditures were incurred) and the transaction time (when the amount due was paid) are not in the same billing cycle, the amortized cost is recorded for the transaction day.
Example: Suppose you used a pay-per-use resource from June 30, 2021 23:00:00 to June 30, 2021 23:59:59, the transaction time was July 1, 2021 00:53:30, and the amount due was $2 USD.
Cost amortization: As the time when expenditures were incurred (June 30, 2021 23:00:00) and the transaction time (July 1, 2021 00:53:30) were not in the same billing cycle, the amount due ($2 USD) was recorded as the amortized cost for July 1, 2021.
Notes:
- The cost amortization of pay-per-use resources involving account adjustments will change the historical data.
- The costs of monthly-settled CDN (billed by traffic) can be amortized by domain name.
- For pay-per-use resources settled on a monthly basis (for example, CDN billed by 95th percentile bandwidth), the amortized cost is recorded when the bills are settled. This explains why there may be a peak in the middle of a month.
Yearly/Monthly Subscriptions
Starting from August 1, 2020 00:00:00, the following cost amortization rules apply to new expenditures:
Expenditures
Expenditures involve the following bill types: Expenditure-purchase, Expenditure-renewal, and Expenditure-change.
- Daily amortized cost = Order amount/Number of days from the effective time to the expiration time
- If the resources in an order are not enabled, their costs will not be amortized. Amortized costs do not include the cost of order subscription and the cost of the orders that were automatically unsubscribed from when resources could not be enabled.
- If the order takes effect and expires on the same day, its costs will not be amortized. Instead, they will be recorded for that day.
- If a subscription is renewed but the order effective time has elapsed, the historical costs will still be amortized over the period the order was effective.
Refunds
The following cost amortization rules only apply to refunds generated since February 1, 2023. For orders unsubscribed from before February 1, 2023 and their associated historical orders, the unallocated expenditures were recorded as amortized costs for February 1, 2023.
For refunds generated before February 1, 2023, if the effective time has passed, the cost incurred during the elapsed days is recorded as amortized cost for the unsubscription day, and the unallocated expenditures will be amortized on a daily basis in the remaining days.
Refunds involve unsubscription from resources, unsubscription from renewal periods, and specification downgrade.
- Unsubscription from resources: After a resource is unsubscribed from, refunds and unallocated expenditures for all historical orders are recorded as amortized costs for the unsubscription day.
Example: Suppose you purchase a 1-month subscription (from the 1st day to the 30th day) at the price of $60 USD, and you request a refund of $56 USD on the 3rd day of the subscription month.
Cost amortization: As the cost amortized over the first two days was $2 USD each day, the cost for the third day is $-56 USD, and no amount will be amortized for the remaining days from the 4th to the 30th.
Order Line
1st Day
2nd Day
3rd Day
4th Day
5th Day
6th Day
...
30th Day
Amortized cost for subscription
2
2
56
-
-
-
...
-
Amortized cost for unsubscription
-
-
-56
-
-
-
...
-
- Unsubscription from renewal periods: Refund and unallocated expenditures for associated renewal orders are recorded as amortized costs for the unsubscription day.
Example: Suppose you purchased a 1-month subscription (from January 1 to January 30) at $60 USD, renewed it for one month at $60 USD on January 5, and unsubscribed from the renewal period for $-60 USD on January 28.
Cost amortization example:
Order Line
1st Day
2nd Day
3rd Day
4th Day
5th Day
6th Day
...
28th Day
29th Day
30th Day
Amortized cost for subscription
2
2
2
2
2
2
...
2
2
2
Amortized cost for renewal
-
-
-
-
-
-
-
60
-
-
Amortized cost for unsubscription from renewal period
-
-
-
-
-
-
-
-60
-
-
- Specification downgrade: The expenditure generated before specification downgrade is recorded as amortized cost for the specification downgrade day, and the unallocated expenditures will be amortized for each day in the remaining days. Daily amortized cost = Refund of the specification downgrade order line/Number of days from the effective time to the expiration time
Example: Suppose you purchase a 1-month subscription (from January 1 to January 30) at the price of $60 USD. On the 3rd day, $30 USD needs to be refunded for specification downgrade.
Cost amortization example:
Order Line
January 1
January 2
January 3
January 4
January 5
January 6
...
January 28
January 29
January 30
Amortized cost for subscription
2
2
2
2
2
2
...
2
2
2
Amortized cost for specification downgrade
-
-
-3
-1
-1
-1
...
-1
-1
-1
Account Adjustment
Any cost amortization that involves account adjustments will change the historical data.
Suppose you purchase a 1-month subscription (from the 1st day to the 30th day) at the price of $60 USD. On the 3rd day, due to an error, Huawei Cloud needs to refund the order amount of $60 USD and you need to pay $66 USD.
In this case, as Huawei Cloud needs to return $60 USD first, the daily amortized cost is $2 USD; as you need to pay $66 USD, the daily amortized cost is $2.2 USD.
Order Line |
1st Day |
2nd Day |
3rd Day |
4th Day |
5th Day |
6th Day |
... |
30th Day |
|---|---|---|---|---|---|---|---|---|
Amortized cost for subscription |
2 |
2 |
2 |
2 |
2 |
2 |
... |
2 |
Amortized cost for account adjustment (refund) |
-2 |
-2 |
-2 |
-2 |
-2 |
-2 |
... |
-2 |
Amortized cost for account adjustment (payment) |
2.2 |
2.2 |
2.2 |
2.2 |
2.2 |
2.2 |
... |
2.2 |
Enterprise Projects and Tags for Amortized Costs
Yearly/Monthly Subscriptions
- Enterprise project: By default, the enterprise project selected for the order is used for amortized costs of your yearly/monthly subscription.
- Tags: Starting from June 1, 2021, the resource tags used when the amortized costs are calculated are applied to the daily amortized costs of your yearly/monthly subscriptions. Tags for costs amortized before June 1, 2021 do not change even if the tags for their resources change.
Pay-per-Use Resources
The enterprise project and cost tags used when pay-per-use resources are settled are used for your amortized costs.
Example
If you purchased a yearly/monthly subscription (valid from January 1, 2021 to February 1, 2021) at the price of $3.5 USD, and then unsubscribed from it on January 13, 2021 and paid a handling fee of $0.35 USD, the total cost would be $3.5 USD, the validity period would be 32 days, and the daily amortized cost would be $0.109375 USD (3.5/32 = 0.109375).
You will see two amortized cost records for January 2021.
- One for the total cost of $3.390625 USD to be amortized over the period from January 1, 2021 to January 31, 2021.
- The other for the cost to be amortized for the remaining days after unsubscription ($-1.7385 USD). The total cost from January 1, 2021 to January 13, 2021 (the unsubscription day) is $1.32 USD, the handling fee is $0.35 USD, and the actual refund amount is $1.83 USD (3.5 - 1.32 - 0.35 = 1.83). The amortized cost for the remaining days after unsubscription in January is $1.7385 USD (1.83/20 x 19 = 1.7385).
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