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1. Click Create to create a new Input VAT Transaction.
2. In the Company field, click a button to the right, then click Add ( ) and create a virtual company (for instance, VAT Apportionment) for purposes of apportionment adjustments.
3. Select Invoice Received as a transaction type.
4. Select Decrease as an adjustment type.
5. Select the Generate GL Transactions check box.
6. Select the Decrease Recoverable VAT check box.
7. Make sure the correct entity is selected in the Entity field.
8. Select the department associated with the transaction.
9. Below the Basis field, notice the link in blue font that presents information about the currency, its exchange rate, price type, and taxation option. Make sure the taxation option is Prices Include VAT. Otherwise, click the link to open the Prices and Currency dialog box and select a check box for this option.
10. Click Save to record the document.
    
    
    
    
11. On the Inventory and Services tab, click Add to add a new line.
12. In the Contents column, type a brief description of the transaction, for instance, "Period-end adjustment".
13. In the Amount column, enter the calculated amount of mixed supplies for which the input VAT cannot be recovered.
14. In the VAT, % column, select the 5% option. Check that the correct VAT adjustment amount (A) appears in the VAT Amount column.
    
    
15. Save and post the document.

Click the Image Removed button Image Added button to review the GL transactions generated for the document. As the result, the initially recoverable VAT will be decreased by the adjustment amount, and the balance of the default expense account will be increased by the same amount.

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