Example of a Journal Entry with VAT Difference Amount
This is an example of how the Foreign Voucher VAT Differences program generates journal entry with VAT difference amounts.
Consider the following:
The supplier and the buyer apply these exchange rates:
Voucher Exchange Rate |
Supplier Exchange Rate |
|---|---|
3 |
2 |
The document type of the voucher is PV and the document number is 10. The voucher has two document lines with the same tax area:
Line Number |
Tax Area |
Foreign Taxable Amount |
Foreign Tax |
|---|---|---|---|
001 |
IVA21 |
1000 |
210 |
002 |
IVA21 |
1000 |
210 |
After voucher entry, the F74H410 table will have supplier domestic amounts using supplier exchange rate 2. When you run the Foreign Voucher VAT Differences program, the system generates the following VAT difference amount:
Tax Area |
Taxable (In Company Exchange Rate) |
Tax (In Company Exchange Rate) |
Taxable (In Supplier Exchange Rate) |
Tax (In Supplier Exchange Rate) |
VAT Difference |
|---|---|---|---|---|---|
IVA21 |
6000 (2000*3) |
1260 (420*3) |
4000 (2000*2) |
840 (420*2) |
-420 |
Consider the following tax area account setup and technical account setup:
Tax Area Account Setup: To get the VAT account, specify bucket number 1 in the processing option so that the system retrieves the GL offset account class (GLC) of Bucket 1 from the tax rate area setup. The process uses PTV21 AAI where V1 is the IVA21 tax area GLC of Bucket 1. The system derives VAT account 28.1110.FINALVAT and creates a credit in this account.
IVA21 GLC Bucket 1: VAT21
PT V21: 28.1110.FINALV21
PT: 28.1110.FINALVAT
Technical Account Setup: To get the technical account, leave the processing option for deriving the technical account blank. The Foreign Voucher VAT Differences program uses the default PH AAI of the processing option and the F0411 table GLC to derive the technical account 28.1110.TECHNICAL. The system creates a debit in this account.
F0411 GLC (G/L Offset Class): Blank
Technical AAI (PO): PH
PH:28.1110.TECHNICAL
If you have not set the processing option to generate journal entries automatically, the Foreign Voucher VAT Differences program processes the journal entries as:
Account Type |
Debit |
Credit |
|---|---|---|
Expense Account |
6000 |
|
28.1110.FINALV21 |
1260 |
|
Supplier Account |
7260 |
|
Total |
7260 |
7260 |
If you have set the processing option to generate journal entries automatically, the system reclassifies the VAT amount difference as:
Account Type |
Debit |
Credit |
|---|---|---|
28.1110.TECHNICAL |
420 |
|
28.1110.FINALV21 |
420 |
|
Total |
420 |
420 |
In this example, journal entry credits VAT account because company exchange rate is greater than supplier exchange rate.