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  13. (Accounting) Invoice items with...

(Accounting) Invoice items with VAT in foreign currency

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The following describes the accounting transactions the system creates when you invoice items with VAT in foreign currency. In this example the exchange rate for VAT and sales orders are different. Note: The currency rates are defined in the DIS control file by entering period and level for Sales order and VAT respectively. You define the exchange rate for the period and level in the Exchange rate table.

Prerequisites

Invoiced qty 12
Sales price 50.00 GBP
Discount on order line 5%
Order discount on order header 10%
Cost price 50.00 SEK
System currency SEK
Exchange rate sales orders 10.10
Exchange rate VAT 9.00
VAT item 25%
Freight fee 75.75
VAT freight fee 25%
Administration fee 120.00
VAT administration fee 25%

Created transactions

Note: The transaction amounts are recalculated to the system currency.

Transaction type Description Amount
Debit		 Amount
Credit		 Calculation/Result/Additional info
820 Sales value Gross VAT   6060.00
Sales price * Quantity * Exchange rate

50.00 * 12 * 10.10 = 6060.00
821 Line discount VAT 303.00  
Sales price * Quantity * Discount on order line * Exchange rate

50.00 * 12 * 0.05 * 10.10 = 303.00
822 Order discount VAT 575.70  
((Sales price * Quantity) – (Sales price * Quantity * Discount on order line)) * Order discount on order header * Exchange rate

((50.00 * 12) – (50.00 * 12 * 0.05)) * 0.10 * 10.10 = 575.70
960 VAT output of order lines   1295.33
(Sales value Gross VAT – Line discount VAT – Order discount VAT) * VAT percentage of VAT handling code.

Note: The system first calculates the VAT in the transaction currency (GBP).
In this example the figures are:

VAT output of order lines (in GBP): (600.00 – 30.00 – 57.00) * 0.25 = 128.25 GBP
VAT output of order lines (in SEK): 128.25 * 10.10 = 1295.325
rounded to 1295.33

This transaction is the VAT amount for the sales value.
832 Vat exchange rate difference   141.08 Transaction type 832 is created since the VAT exchange rate is not the same as the Sales order exchange rate. First the system calculates the VAT amount in the transaction currency. Then the system calculates the VAT amount in the system currency, first with the Sales order exchange rate, then with the VAT exchange rate. Lastly the system calculates the difference between those two transactions.

In this example the figures are:

VAT amount of goods in GBP: – 128.25
VAT amount in system currency with Sales order exchange rate: 128.25 * 10.10 = 1295.325
VAT amount in system currency with VAT exchange rate: 128.25 * 9 = 1154.25
Difference in system currency: 1295.325 – 1154.25 = 141.075
rounded to 141.08
960 VAT output of order lines 141.08   Transaction type 960 is created to adjust the VAT account by the value of the exchange rate difference.
800 Cost of goods sold 600.00  
Cost price * Quantity

50.00 * 12 = 600.00

If the cost type is:

  • Standard cost, the cost price is retrieved from the Standard cost field in the Item file.
  • Average purchase price, the cost price is retrieved from the Average cost field in the Item file.
  • FIFO, the cost price is retrieved from the oldest active FIFO transaction in the FIFO file.
901 Stock value   600.00
Cost price * Quantity

50.00 * 12 = 600.00

The cost price is retrieved as described in Cost of goods sold above.
826 Freight VAT   765.08
Freight fee on order * Exchange rate

75.75 * 10.10 = 765.075 rounded to 765.08

This is the freight fee.
961 VAT output of order fees   191.29
Freight fee on order * VAT freight fee * Exchange rate

75.75 * 0.25 = 18.9375 rounded to 18.94
18.94 * 10.10 = 191.29

This is the VAT amount of the freight fee.
832 Vat exchange rate difference   20.83 This transaction is created since the VAT exchange rate for the freight fee is not the same as the Sales order exchange rate. First the system calculates the VAT amount in the transaction currency. Then the system calculates the VAT amount in the system currency, first with the Sales order exchange rate, then with the VAT exchange rate. Lastly the system calculates the difference between those two transactions.

Freight VAT amount in GBP: 18.94
Total VAT amount in system currency with Sales order exchange rate: 18.94 * 10.10 = 191.294
Freight VAT amount in system currency with VAT exchange rate: 18.94 * 9 = 170.46
Difference in system currency: 191.294 – 170.46 = 20.834
rounded to 20.83
961 VAT output of order fees 20.83   This transaction is created to adjust the Fee VAT account by the value of the exchange rate difference.
829 Administration fee VAT   1212.00
Administration fee on order * Exchange rate

120.00 * 10.10 = 1212.00

This is the administration fee.
961 VAT output of order fees   303.00
Administration fee on order * VAT administration fee * Exchange rate

120.00 * 0.25 = 30.00
30.00 * 10.10 = 303.00

This is the VAT amount of the administration fee.
832 Vat exchange rate difference   33.00 This transaction is created since the VAT exchange rate for the administration fee is not the same as the Sales order exchange rate. First the system calculates the VAT amount in the transaction currency. Then the system calculates the VAT amount in the system currency, first with the Sales order exchange rate, then with the VAT exchange rate. Lastly the system calculates the difference between those two transactions.

Administration fee VAT amount in GBP: 30.00
Administration fee VAT amount in system currency with Sales order exchange rate: 30.00 * 10.10 = 303.00
Administration fee VAT amount in system currency with VAT exchange rate: 30.00 * 9 = 270.00
Difference in system currency: 303.00 – 270.00 = 33.00
961 VAT output of order fees 33.00   This transaction is created to adjust the Fee VAT account by the value of the exchange rate difference.
832

 VAT exchange rate difference   194.91  
802 Coin adjustment   0.61
Coin adjustment in invoice currency * Exchange rate

In this example the figures are:

Net sales value in GBP: 600.00 – 30.00 – 57.00 = 513.00
Freight value in GBP: 75.75
Administration value in GBP: 120.00
VAT output of order lines (in GBP): (600.00 – 30.00 – 57.00) * 0.25 = 128.25
VAT output of fees in GBP: (120.00 + 75.75) * 0.25 = 48.9375, rounded to 48.94
Total VAT amount: 128.25 + 48.94 = 177.19
Total in GBP: 513.00 + 75.75 + 120.00 + 177.19 = 885.94
Invoice total in GBP: 886.00
Coin adjustment in GBP: 885.94 – 886.00 = -0.06
Coin adjustment in SEK: -0.06 * 10.10 = -0.606, rounded to -0.61

In the Currency table for the GBP currency, the Adjust inv amount field is 1.00, which means that invoice amounts should always be rounded off to the nearest even sterling pound.
969 Invoice rounding difference 0.01   This transaction accounts any currency differences that may occur in the calculation from the invoice currency to system currency.

Sum of all amounts in credit: 10622.22 SEK
Sum of all amounts in debit: 1673.61
Total amount: 10622.22 – 1673.61 = 8948.61
Accounted A/R: 886.00 GBP * 10.10 = 8948.60
Difference: 8948.61 – 8948.60 = 0.01
A/R To be accounted on Account Receivable 8948.60    

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