This chapter discusses:
Using the JD Edwards EnterpriseOne Joint Venture Management system, you can set up joint ventures so that the system accurately calculates the cost and revenue for each partner in the venture, using predefined rules that you create for the joint venture and its partners.
For joint venture data to be calculated correctly, you must set up multiple pieces of information for the venture, preferably in this order:
Decide on the structure for your joint venture, and set up the appropriate companies and business units that make up the joint venture.
At a minimum, the joint venture must include at least one business unit (the joint venture business unit). In cases where the joint venture includes multiple business units, you specify the parent and child hierarchy of the business units using the Project Number field in the Business Unit Master (P0006) application.
Setting up business units and companies for a joint venture is done outside of the Joint Venture Management system. You can use the standard instructions for setting up companies and business units when creating these entities for your joint venture.
Add each member of the joint venture to the Address Book system.
Members in a joint venture can include business units, external businesses, or individuals. Address book records are required for each entity associated with a joint venture.
Set up supplier master and customer master records for each partner in a joint venture.
To invoice a partner, the partner must have a record in the Customer Master table (F0301) and to create a voucher for a partner, the partner must have a Supplier Master record in the Supplier Master table (F0401).
(Optional) Create a legal entity record for each entity associated with the joint venture.
Legal entity records enable you to track legal information about the entity that is not stored in the address book record. To create a legal entity record, an address book record must also exist. Legal entities for a joint venture can be a business unit, project, property, or partner in the joint venture.
Set up the joint venture master record for the joint venture.
You use the Joint Venture Master to identify default information about the joint venture, such as the minimum amount to use for payments and invoicing. Additionally, you can set up the status of the joint venture to determine whether it is currently active. You also use this record to associate the related company and business units with the joint venture and to define the managing business unit and managing company.
(Optional) Create an approval list to track the date on which you receive approvals from all required entities.
You can use approval lists to track both internal and external approvals for the venture. After you create the approval list, you attach it to the Joint Venture Master. Once the approval list is completed and marked as approved, the system automatically marks the joint venture as approved.
Set up the chart of accounts for the joint venture. The managing business unit must have the same chart of accounts used by the joint venture business unit. This is to ensure that the managing business unit has both income statement accounts and balance sheet accounts.
Again, this step is done outside of the Joint Venture Management system, and you can use the standard instructions for setting up the chart of accounts.
Set up the Automatic Accounting Instructions (AAIs) for the joint venture.
You use the account ranges AAIs to define the joint venture account type (Revenue, Expense, or Capital Cost) for accounts that are within the AAI ranges and are marked as distributable in the P09J01 program.
You use cutback AAIs to identify cutback accounts that are used to create offset entries in the Account Ledger table (F0911) when you create invoices, vouchers, and journal entries to bill and pay the partners.
You use the overhead expense and overhead offset AAIs to process the overhead amount to create overhead journal entries.
You use the AAIs for cash calls to define the accounts for processing and managing cash calls to cover the expenses associated with your joint venture.
Identify the distributable accounts for the joint venture.
Distributable accounts are those accounts for which you want the system to split the amounts across the partners in a joint venture. If you do not specify an account is distributable, the amounts associated with that account are not included in the joint venture account ledger.
Set up one or more Division of Interest (DOI) records for the joint venture.
A DOI is a list of the partners associated with the venture, and includes each partner's percentage of ownership. These percentages are used when calculating distributions for the joint venture.
You also use the DOI to specify additional information about the partners in a venture, including which partner is the rounding partner, which are the insider business units, and whether invoicing and payments are created for the insider business units.
A joint venture can have multiple DOIs, which is necessary when the percentage of ownership varies depending on the type of transaction being processed.
Define the DOI assignment rules for the joint venture.
Once you have created your DOIs, you must set up rules so that the system knows which DOI to assign to each transaction. The system uses the DOI to determine how to distribute the amounts associated with the transaction across the partners in the joint venture. If you do not want the transaction amounts to be split among the partners but to be directly billed to a single partner, you can set up a rule to specify such a requirement.
Set up distribution ledgers for the joint venture.
You use the distribution ledgers for financial reporting.
Set up business unit attributes.
Business unit attributes include setting up whether to calculate the overhead for the business unit, whether to allow negative overhead, and whether to use a specific business unit to which the offset journal entry for the overhead is written.
Set up account groups.
You create account groups to define the accounts or account ranges to be included or excluded from joint venture processing. When the overhead is a percentage of the costs, you can use account groups to specify the costs accounts from which to get the percentage of the overhead. When a cash call is for a specific expense within a joint venture, you can use an account group to define the accounts associated with the type of expense that can be drawn from the cash call.
Set up escalation indices.
Escalation indices are the agreed-upon increase in the overhead that you specify for each month or year. A fixed overhead amount can be escalated regularly according to an index specified for a calendar year.
Set up overhead rules.
To calculate the overhead for a joint venture, you create overhead rules and the associated overhead methods. Each method has effective start and end dates for calculating the overhead amount. The system provides six overhead methods to use: Fixed Amount, Fixed Amount with Escalation, Fixed Percent, Fixed Percent with Sliding Scale, Day Rate, and User Defined Method.
Assign overhead rules.
You assign overhead rules for the system to decide how to calculate overhead for the business units associated with a joint venture.
Set up joint venture-based allocations.
You set up joint venture-based allocations to allocate the indirect costs incurred by the managing partner to the different joint ventures and business units that benefited from the costs.
See ”Setting Up Versions for Joint Venture-Based Allocations” and ”Setting Up Specifications for Advanced Variable Numerator Allocations” in the JD Edwards EnterpriseOne Applications General Accounting Implementation Guide.