Understanding Joint Venture Processing

The Joint Venture Processing feature of PeopleSoft Asset Management enables you to accurately track finances when two or more business units share in the ownership of an asset or a group of assets. To use this feature, you must set up a Joint Venture Business Unit, identify business units that participate in the joint venture, and associate all of the business units with their respective equities.

The following graphic illustrates the relationship between a joint venture business unit and its participants. A joint venture business unit owns 100 percent of all joint venture assets. Participating business units are each assigned an equity percentage of the jointly owned assets. When you add, adjust, or retire an asset at the joint venture business unit level, similar transactions take place at the participant level, with cost and depreciation prorated according to each participant's equity percentage.

Image: Joint venture processing

The following graphic illustrates the relationship between a joint venture business unit and its participants.

Joint venture processing

Equity percentages are defined in the Joint Venture Allocation table when you set up the PeopleSoft Asset Management tables. The sum of the participants' percentages must equal 100 percent. Equity percentages are allotted to participating business units according to the values you enter in the joint venture allocation table.

This allocation table sets up joint venture processing for Participants 1, 2, and 3, which own 60 percent, 20 percent, and 20 percent of the joint venture assets, respectively:

Business Unit

Percentage

Joint Venture Business Unit

100

Participant 1

60

Participant 2

20

Participant 3

20

Most transactions on joint venture assets are performed at the Joint Venture Business Unit level. These transactions are automatically performed at the participant level as well, with cost, fair market and depreciation information prorated based on each participant's equity percentage.

For example, asset ID JV00022 was entered for the Joint Venture Business Unit. With USD 10,000 of remaining value and USD 2,000 in accumulated depreciation, these assets are created based on the previous allocation table:

Unit

Asset ID

Book

Remaining Value

Accumulated Depreciation

Joint Venture Business Unit

JV000022

CORP

10,000

2,000

NA 

NA 

FEDERAL

10,000

2,000

Participant 1

JV000022

CORP

6,000

1,200

 

 

FEDERAL

6,000

1,200

Participant 2

JV000022

CORP

2,000

400

 

 

FEDERAL

2,000

400

Participant 3

JV000022

CORP

2,000

400

 

 

FEDERAL

2,000

400

Adds, Adjusts, and Retirements must take place at the Joint Venture Business Unit level. Changes in ownership allocation—such as additions and deletions of participants and reallocations of equity percentages—must be made at the Joint Venture Participant level.