Unexpected Behavior for ADV Application to an Exp Report

Good day,

I Created an Employee Advance with 500 SAR and paid to the employee
the accounting was
Dr ADV 500

Cr Liability 500

Dr. Liability 500

Cr. Cash 500

After that the employee entered an Expense report of 500 SAR and tax rate 15% Recoverable (tax is included)
the Advance is automatically applied and generated the following entries
Dr Exp 434.78

Dr Tax 65.22

Dr Liability 500

Cr ADV 434.78

Cr Tax 65.22

Cr Liability 500

the expectation is that the ADV account will credit with 500 instead of 434.78 and effect the tax with the remaining amount 130.43 ?

Regards,