Understanding Cost Amortization Rules

Updated on 2025-02-24 GMT+08:00

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Background

Huawei Cloud provides various billing modes. In accrual-based accounting, you need to summarize and analyze the costs of yearly/monthly resources based on the actual daily costs within the specified time range. In this context, "amortized costs" are introduced.

Essence of Amortized Costs

Amortized costs reflect the effective costs of your upfront resources amortized to the actual users over the usage time. Cost amortization is intended for historical expenditures and cannot be used for future expenditures. If the ownership of a resource changes, the resource ownership of the historically amortized costs remains unchanged.

Generally, the amortized pay-per-use cost is the same as your original amount due. However, the amortization rules of yearly/monthly subscriptions are complex. The calculation formular is as follows:

Daily amortized cost for a yearly/monthly subscription = Order amount/Number of days over the order effective term (number of days from the effective time to the expiration time)

Costs are amortized based on your actual usage. Pay attention to the following special cases:

If the cost tag of a resource is changed, the amortized cost generated is historical data and the resource has been used by its owner. Therefore, this cost is attributed to the historical resource owner (historical cost tag or enterprise project). The new cost tag only applies to the future amortized costs.
NOTE:

If the enterprise project of a resource changes, you need to enable related functions to amortize costs by the latest enterprise project.
If a resource is refunded, the unamortized costs will be amortized on the unsubscription day. For details, see Why Are My Costs Negative?