21 Drawing on Cash Calls for Joint Venture Expenses (Release 9.2 Update)

This chapter discusses:

Note:

Before you can draw on cash calls, you must complete the joint venture distribution process so that the transaction amounts are internally distributed to the partners and the distribution records for each partner are available in the Joint Venture Distribution Detail table (F09J12).

To understand the joint venture distribution process, see Chapter 17, "Processing Joint Venture Account Ledger Transactions".

21.1 Understanding the Process for Drawing on Cash Calls

If your joint venture uses cash calls to manage the joint venture expenses, you will draw on the cash calls instead of invoicing the partners. The cash calls will be applied to the distributed expenses for the joint venture and partner.

You use the Assign, Draw, and Create JEs for Cash Calls program (R09J620) to draw on the cash calls.

When you run the R09J620 program, it performs the following tasks simultaneously:

  • Assigns cash calls to the distributed expenses for each partner in the Joint Venture Distribution Detail table (F09J12)

  • Reserves distributed expenses to their associated exclusive cash calls

  • Draws on cash calls by calculating the difference between the previous cash call open amount and the distributed amount from the distribution detail transactions

  • Creates journal entries for the assigned distributed expenses to debit the partner contributions account and credit the joint venture cutback expense or cutback capital cost account

When attempting to assign cash calls to expense transactions, the system uses the joint venture business unit hierarchy and the cash call definition to apply the exclusive cash calls first and then the non-exclusive cash calls. Similar to the DOI and overhead rules assignments, the system assigns the cash call starting with the most specific (business unit) to the least specific (joint venture and partner) information.

This list is in order from the least specific to the most specific:

  • Joint Venture and Partner

  • Joint Venture, Partner, and Project Number

  • Joint Venture, Partner, and Business Unit

Note that each cash call definition can have an account group assigned to it. These cash calls will only be assigned to the distribution details that have the accounts that are included based upon the account group definition as well as the joint venture, partner, project, and business unit.

Figure 21-1 Cash Calls Drawing Process

Description of Figure 21-1 follows
Description of ''Figure 21-1 Cash Calls Drawing Process''

21.1.1 Assigning Cash Calls to the Distributed Expenses

Using the data selection for the R09J620 program, you select the joint ventures that you want to process. When you run the program, the system processes the cash calls that are defined for the selected joint ventures. The exclusive cash calls are processed first and assigned to the distribution detail records based on their level in the joint venture hierarchy. The cash calls with the most specific (business unit) information are assigned first and the cash calls with the least specific (joint venture and partner) information are assigned last.

A cash call that has been designated as exclusive indicates that no other cash calls can be used for the expenses covered by that exclusive cash call. If an exclusive cash call is depleted or not available to draw, the system will reserve the distribution details associated with the exclusive cash call. For example, consider that you have a cash call at the joint venture and partner level as well as an exclusive cash call at the joint venture, partner, and project level. When the exclusive cash call is depleted, the non-exclusive cash call at the joint venture and partner level cannot be used for the expenses associated with the exclusive cash call.

The system processes only those cash calls that meet the following criteria:

  • Cash call open amount is not equal to zero.

  • Cash call is effective on the service tax date.

  • Cash call is at the status Available to Draw.

Splitting a Distribution Transaction Line When Cash Call Depletes

The system assigns a cash call to the distribution detail transaction until the cash call open amount becomes zero. If a cash call can only partially cover the amount of a distributed transaction, the system splits the distributed amount and creates a new transaction line for the remaining distributed amount. In the new transaction line, the system populates the remaining distributed amount in the Distributed Amount field and the distributed amount before the split in the Original Distributed Amount field. This remaining distributed amount can be assigned to another cash call or invoiced to the partner. The split transaction lines can be identified through the JV Distribution Detail Line No. column in the F09J12 table.

Using Exclusive Cash Calls to Reserve Distribution Detail Records

When you run the R09J620 program, the system processes the exclusive cash calls first and reserves their associated distribution detail transactions. To ensure the reservation, the system populates the Exclusive Cash Call ID to these distribution detail transactions in the F09J12 table.

The system reserves the distribution detail transactions to the exclusive cash call once it has been invoiced regardless of whether the cash call is closed or on hold or the open amount is zero.

21.1.2 Creating Journal Entries to Draw on the Cash Calls

As the cash calls are assigned to the distribution detail records, the system also creates the journal entries to create the credit and debit transactions for the cash call.

Debit and Credit Entries for Journal Entries in the F0911 Table Created During the Drawing Process

The distributed amount is debited to the partner contribution account.

The system determines the partner contribution account for the cash call draw transaction using the managing company and AAI JVCxxx (Partner Contributions) where xxx is the G/L offset code assigned to the joint venture. If you have specified a G/L offset code in the Joint Venture Master program (P09J30), the system concatenates the G/L offset code to the AAI Item JVC to locate the account. If the account is not found using the managing company, the system uses the company 00000. Also, if you have setup the Joint Venture Master program (P09J30) to create cash calls by subledger, the system uses the subledger type A (Address Book) to add the subledger information to the partner contribution account. The outside partner's address book number is used as the subledger value, and if the partner is an insider business unit, the address book number associated with the business unit is used as the subledger value.

The offset credit entry is made to the appropriate cutback account of the business unit to which the original expense is booked. The cutback account that is used is determined by the AAI value written in the Cutback AAI Item column for the record in the F09J12 table. The entries to the cutback accounts are always summarized by cutback account and original business unit. Therefore, there may be multiple entries to cutback accounts depending upon the number of business units associated with the originating transactions. If you have set up the processing option for R09J620 program to create cutback entries by subledger, the system adds the subledger information to the cutback account. Depending on your processing option setup, the subledger can be:

  • The address book number for an outside partner {Subledger Type = A (Address Book)} or the business unit for an inside partner {Subledger Type = C (Business Unit)}

  • The address book number for an outside partner or the address book number of the insider business unit {Subledger Type = A (Address Book)}

Example: G/L Accounting Entries when Drawing on a Joint Venture Cash Call for One or More Distributed Expenses

A cash call for a partner and joint venture is drawn against by expense and capital cost distribution details.

Joint venture: A-GREENACREHOLDINGS

Partner: 7500010 (Thomson Company)

Cash call amount applied: Expenses = 50,000.00 and Capital Cost = 20,000.00

A journal entry is created for the partner's share of the expenses and capital cost. The journal entry uses the Partner Contributions account and the business unit of the original transaction for the joint venture's cutback accounts.

This diagram illustrates the G/L entries for the cash call journal entry for drawing on the cash call.

Figure 21-2 Joint Venture Cash Call Journal Entry Transactions to Draw on the Cash Call

Description of Figure 21-2 follows
Description of ''Figure 21-2 Joint Venture Cash Call Journal Entry Transactions to Draw on the Cash Call''

The systems creates the journal entry documents with the batch type JG (Joint Venture Journal Entries). A batch is created for each managing company.

As journal entries are created, the system updates the following information:

  • In the F09J40 table, the cash call open amount is updated with the difference between the previous open amount and the distributed amount from the distribution detail transaction.

  • In the F09J12 table, the processed records are updated with the cash call ID, exclusive cash call ID (for an exclusive cash call), distribution transaction type equal to Journal Entry, and transaction status equal to Process Complete.

  • The system also enters the following distribution document information for the journal entries created: Distribution Document Number, Distribution Document Company, Distribution Document Type, Distribution G/L Date, Distribution Line Number, Distribution Line Extension, and Distribution Ledger Type.

When the program completes processing, the system prints a report listing the number of journal entry documents created and the batch numbers generated in the process. The report also includes a message for records in error. You can review the errors in the work center, correct the issue, and rerun the process.

21.2 Prerequisites

Before you complete the tasks in this section:

  • Set up the processing options for the Assign, Draw, and Create JEs for Cash Calls program (R09J620).

    • On the Select tab, enter a value for the following processing option:

      • Date - Service/Tax: Specify the Service/Tax Date that the system uses to select distributed transactions when assigning cash calls. The system will select distributed transactions with a service/tax date less than or equal to the specified date and cash calls with an effective date less than or equal to the specified date.

    • On the Process tab, enter values for the following processing options:

      • Process Cash Calls for Distribution Details: Use this processing option to define how the distribution details will be processed.

        Enter 1 to create journal entries for distribution details and reversals that have a cash call assigned and are at the status Available to Process.

        Note:

        You create journal entries for reversal transactions to reverse the amount that is drawn from the cash calls.

        See Chapter 23, "Voiding and Deleting Joint Venture Distribution Documents (Release 9.2 Update)".

        If you leave this processing option blank, the system will assign, draw, and create journal entries for cash calls.

      • Allow Cash Call Open Amount to Exceed Original Amount: Specify whether to allow the cash call open amount to be greater than the original amount.

        Enter 1 to allow distribution detail transactions for adjustments to exceed the original cash call amount. The system issues a warning to the work center that the cash call open amount has exceeded the original amount.

        If you leave this processing option blank, the system will not allow the cash call open amount to exceed the original amount. The system issues an error to the work center in this case.

      • G/L Date: Specify the general ledger date that the system assigns to the journal entry during journal entry creation. If you do not enter a date, the system date is used.

      • Document Type: Specify the document type that the system assigns to the journal entry during journal entry creation. If you leave this processing option blank, JE is used.

      • Batch Approval: Specify whether to set the batch as approved or apply the status that is specified in the general accounting constants. If you leave this processing option blank, the system applies the status that is specified in the general accounting constants.

      • Cutback Account by Subledger: Specify whether to use subledgers when creating entries to the cutback account.

        If you enter 1, the system uses the address book number for an outside partner as the subledger with a subledger type of A (address book), and uses the business unit of the inside partner as the subledger with a subledger type of C (business unit).

        If you enter 2, the system uses the address book number of the outside partner or the address book number of the insider business unit as the subledger with a subledger type of A (address book).

        If you leave this processing option blank, subledgers will not be used in the entries to the cutback account.

    • On the Versions tab, specify the versions that you want to use for these programs: Journal Entry MBF (P0900049) and General Ledger Post (R09801). If you do not specify a version for the P0900049 and R09801 programs, the system uses ZJDE0001 as the default version.

      When you specify a version of the R09801 program in the processing option, the system automatically runs the R09801 program after creating the journal entry batch and posts the batch. The system submits the R09801 program for each batch that is created. A batch is created for each managing company that is included in the selected cash call records.

  • Set up data selection for the R09J620 program to include the joint ventures for which you want to process the distribution detail transactions to draw on the cash calls.

  • Enter a value to the G/L Offset Code field and select the Cash Call by Subledger check box in the P09J30 program as required.

    See Section 4.2.2, "Entering Joint Venture Master Records".

21.3 Running the Assign, Draw, and Create JEs for Cash Calls Program (R09J620)

From the Joint Venture Management module (G09J), select Periodic Processing, Process Distributed Transactions, and then select Assign, Draw, and Create JEs for Cash Calls.