7 Setting Up Division of Interest Records

This chapter discusses:

7.1 Understanding Division of Interest for a Joint Venture

When you set up a joint venture, you must determine who the partners are that are involved in the joint venture, and what percentage of ownership those partners have. The percentage of ownership is used to calculate the distribution of financial transactions associated with the joint venture. You use the Division of Interest/Approval List program (P09J20) to create division of interest (DOI) records for the joint venture. DOI records are stored in these tables:

  • Division of Interest Header (F09J20)

  • Division of Interest Detail (F09J21)

DOIs are a list of all of the partners involved in a joint venture. A DOI also includes an effective date to determine when the DOI becomes active, and it includes the following important information about each partner in the list:

  • Whether the partner is an insider business unit or an outside partner

  • Percent of interest

  • Distribution only

When you add partners to the DOI, you can specify the address book number for an outside partner, or you can specify the business unit if you are entering the insider or managing business unit for the joint venture. Typically, there is only one insider business unit, which is the managing partner of the joint venture. However, you can enter multiple insider business units, if necessary. When you specify an insider business unit, you can also specify whether the system creates invoices and vouchers for that partner. You use the Invoice/Voucher Insider option to specify whether to create journal entries or invoices and vouchers. The Invoice/Voucher Insider option is enabled only for partners that have a value specified in the Insider Business Unit field.

You can also specify which partner in the DOI list is the rounding partner. Any rounding difference that occurs when splitting transactions between the partners is netted out to the rounding partner. The rounding partner receives the extra cost or revenue to split the amount. Typically, the managing partner is the rounding partner. However, you can select any partner whose percent of interest is greater than zero.

For example, joint venture ABC has 4 partners, each with an equal 25% interest. An expense of 301.50 USD must be distributed among those partners. When you divide 301.50 USD equally among the 4 partners, you get 75.375 USD. The system uses the rounding partner to be able to split the amounts as evenly as possible, while still being able to create invoices or vouchers with valid amounts. In this scenario, the system would create invoices to three of the partners for 75.37 USD, and create an invoice to the rounding partner for 75.39 USD. The total of these four invoices is 301.50 USD.

Each joint venture must have at least one DOI set up. However there can be multiple DOIs set up for each joint venture. Multiple DOIs are necessary when the ownership percentage differs for specific transactions within the joint venture.

For example, you might have a joint venture with four partners that share equal ownership for most of the transactions associated with the venture. Therefore, you would set up a DOI that includes these four partners, each with 25% ownership. However, the joint venture agreement might state that there are certain expenses that two of the partners are exempt from incurring. To accommodate this situation, you would create an additional DOI for this venture, which includes the two partners that will incur the expense, and each will have a 50% ownership.

You might also need to create multiple DOIs for a joint venture if the ownership percentage among the partners changes as of a specific date. For example, on May 1, 2016, you created a DOI based on the current ownership percentages. You have been notified that percentages among the partners is changing on January 1, 2018. To accommodate this scenario, you can create two DOI records as follows:

DOI #1 DOI #2
DOI Name: JVABCWells

Effective Date: May 1, 2016

Partner 1: 30%

Partner 2: 30%

Partner 3: 40%

DOI Name: JVABCWells

Effective Date: January 1, 2018

Partner 1: 30%

Partner 2: 35%

Partner 3: 35%


Using this example, you would assign DOI JVABCWells to the joint venture at the appropriate levels, using the DOI assignment rules. When the system processes transaction data for the joint venture, it uses the activity date (which is the service/tax date) to determine which DOI to use. For example, transactions with dates between May 1, 2016 and December 31, 2017 would use DOI #1 to calculate distributions, and those with a transaction date on or after January 1, 2018 would use DOI #2.

When you add partners to a DOI, you enter either the insider business unit or the address book number for an outside partner. If there is a valid Legal Entity record for the associated address book number, the system automatically populates the Entity Type field on the partner with the value from the Legal Entity record. You can override the Entity Type on the partner if necessary. If no Legal Entity record exists for that address book number, you can specify the Entity Type on the partner or leave it blank.

Before you create DOIs, you must set the processing options for the P09J20. The system uses the processing options to determine whether a legal entity record is needed for each entity added to a DOI. If the processing options are set to add a legal entity record, and one does not already exist, the system automatically adds a legal entity record to the Legal Entities table (F09J10) for the address book number you enter. The system uses the Alpha Name field from the Address Book table (F0101) to populate the Legal Name field in the F09J10. If necessary, you can edit the information in the F09J10 using the Legal Entities program (P09J10).

For a partner who is set up as a legal entity, you can access the legal entity information for the partner from the P09J20 program for division of interest. This enables you to view the legal entity information or revise the information as required.

See Chapter 3, "Setting Up Legal Entities for Joint Ventures".

Distribution Only Option

You also use the DOI to identify any partners that are considered Distribution Only partners. When you select this option, the system continues to distribute cost and revenue amounts among the partners using the DOI percentages, but it does not bill or pay any of the partners that are marked as Distribution Only partners.

You might choose to select this option for a partner who is disputing the costs of the joint venture, or for partners who are currently not paying their portion of the joint venture. This option still enables the transaction amounts to be split and distributed correctly, but suppresses the actual billing and payment for that partner. The system updates the transaction status for Distribution Only transactions to Process Complete after amounts are distributed.

DOI Status

Typically, when you are setting up DOI records, you use the In Progress status on the records. Using this status enables you to save the record without entering all partner data, or before the total percent of interest on the DOI is equal to 100. When the data on the DOI is complete, you can change the status to Active. The total percent of interest must equal 100 to change the DOI to active.

After you complete the DOI, you use the DOI Assignment Rules program to specify where the DOI should be used. When processing financial transactions for a joint venture, the system uses DOI Assignment rules to assign the correct DOI to each transaction, ensuring the proper distribution of amounts.

See Chapter 8, "Setting Up Division of Interest Assignment Rules".

Once the DOI has been used to calculate any distributions for the joint venture, the system makes the DOI record read-only, with the exception of the Status field. If you need to make changes to a DOI after it has been used to calculate distributions, you must create a new DOI record, using the Effective Date field to specify when the system should begin using that new record.

You can update the status of the DOI to Inactive to not use the DOI. The system records the system date as the inactive date and this date is informational only. Inactive DOIs can be re-activated at any time even if the DOIs are assigned to the transaction records in the Joint Venture Account Ledger table (F09J11). When a DOI is re-activated, the inactive date is cleared in the system.

Copying a DOI

You can copy an existing DOI to create the new record. When you copy a DOI, the system automatically copies the following information from the copied DOI to the new DOI record. You can override all of the copied values, if necessary.

  • DOI Description

  • DOI Purpose

  • Partner list details, including the division of interest values and Distribution Only specifications.

You must specify a DOI name for the copied record. The system assigns the In Progress status to the new DOI record, which you can override if necessary. You must also specify an effective date for the new DOI record. The system assigns the system date as the effective date, which you can override.

Deleting a DOI

You can update or delete a DOI record if the DOI has not been used for distributions.

7.2 Working with Division of Interest Records for Joint Ventures

To create and use DOIs, you must use a version of the Division of Interest/Approval List program (P09J20) that has the processing options set to create DOIs, and not approval list records.

You use this version of the P09J20 program to create, update, and copy DOI records.

7.2.1 Prerequisite

Before you complete the tasks in this section, set up the processing options for the version of the P09J20 program used to create DOIs.

On the Process tab, you set up these processing options:

  • Partner List Type

    Specify which type of record this program creates. You can choose to create approval lists or DOIs. A DOI is a list of the percentage splits by partner in a joint venture. An approval list is a list of the partners and entities that need to approve the joint venture.

    Note that to create DOIs, you must be using a version of the P09J20 that has this option set to blank. The system launches the form for approval list or DOI based on this processing option setup.

  • Add Legal Entity

    Specify whether the system automatically creates a legal entity record when the address book number used on the DOI does not have a corresponding record on the Joint Venture Legal Entities table (F09J10). If the system creates a record, the value in the Legal Name field is copied from the Address Book table (F0101) Alpha Name field. Additionally, the system uses the value on the DOI to specify the Entity Type (if it is available), and the system date as the Effective Date value for the F09J10 record.

    Note: If you enter an Insider Business Unit on the DOI, the system retrieves the address book number from the business unit master to determine if a legal entity record exists for that partner. If no address book number exists on the business unit master, the system will not create a legal entity record for that partner, regardless of how this option is set.

  • Approve the Approval List

    This processing option is not used by DOIs; it is only used by approval lists. You use this processing option to specify whether to allow users to approve the approval list.

On the Versions tab, you set up this processing option:

  • Legal Entities (P09J10)

    Specify which version of the Legal Entities program (P09J10) the system launches when you access the program from the Form menu on the Edit Division of Interest form.

7.2.2 Creating a Division of Interest for a Joint Venture

To create a DOI:

  1. From the Joint Venture Management module (G09J), click Joint Venture Setup, and then DOI Master.

  2. On the Work with Division of Interest form, click Add.

  3. On the Create Division of Interest form, complete the required Name and Description fields.

    You must enter a name that has not already been used for an approval list or for a DOI with the same effective date.

  4. Optionally, complete these fields:

    • Purpose

    • Effective Date

      The system populates the system date as the effective date by default. Update the date as required.

  5. Click Save on the form.

    A DOI record is created with the header information that you entered.

    When you click Save on the Create Division of Interest form, the system displays the Edit Division of Interest form. The header fields are populated with the values that you entered.

  6. If you have not specified a value for the Purpose field when you created the header record, you can complete this field on the Edit Division of Interest form.

  7. Verify that the status is set to In Progress.

  8. In the detail area of the form, enter the insider business unit or the address number of the outside partner included in the joint venture.

  9. Complete the following information for the partner (outside partner or the insider business unit):

    • Entity Type

      If a Legal Entity record exists for this partner, the default entity type is displayed. You can override this value.

    • Percent of Interest

      Specify the partner's percentage of ownership in the joint venture.

    • Rounding Partner

      Specify whether the partner is the rounding partner. This partner receives any rounding difference that occurs when splitting transactions between the partners.

    • Invoice/Voucher Insider

      Specify whether to create invoices and vouchers for the partner. If this option is not selected, the system creates only journal entries for the partner. The Invoice/Voucher Insider option is enabled only for partners that have a value specified in the Insider Business Unit field.

    • Distribution Only

      Select this option to use this partner and the associated percent of interest when calculating distributions for the joint venture, but to also suppress billing and payment for this entity.

  10. To continue adding parties, click in a new row in the detail area, and repeat steps 8 and 9.

  11. If the value in the Total Percent of Interest field is equal to 100, you can change the status of the DOI to Active if you are ready to activate the DOI. Otherwise, leave the status of the DOI as In Progress.

  12. Click OK to save your changes.

7.2.3 Copying a Division of Interest for a Joint Venture

To copy a DOI:

  1. From the Joint Venture Management module (G09J), click Joint Venture Setup, and then DOI Master.

  2. On the Work with Division of Interest form, search for the DOI that you want to copy.

    You can use the QBE fields in the grid or the header fields to filter records. To search for records that are effective as of a specific date, enter a date in the header Effective Date field.The system retrieves all records that are effective as on that date. You can click the visual assist for the Name field to search for DOI records by a combination of these values: name, status, and effective date.

  3. Select the record that you want to copy and click Copy.

    The system displays the Copy Division of Interest form.

  4. Complete the required Name and Description fields.

    You must enter a name that has not already been used for an approval list or for a DOI with the same effective date.

  5. Update these fields as needed:

    • Purpose

    • Effective Date

  6. Click Save.

  7. On the Edit Division of Interest form, note that the status has been changed to In Progress, regardless of the status of the DOI you copied. If necessary, update this status.

  8. Review and update the partner data as needed.

  9. Click OK to save your changes.