1. Implementing Joint Venture Management
  2. Create an Overhead Method to Calculate Overhead Using a Percentage of Joint Venture Cost Transactions

Create an Overhead Method to Calculate Overhead Using a Percentage of Joint Venture Cost Transactions

Create an overhead method for calculating overhead from joint venture distributions.

  1. Navigate to Setup and Maintenance and select the Joint Venture Management functional area under the Financials offering.
  2. Click the Manage Joint Venture Overhead Methods task.
  3. On Joint Venture Overhead Methods, click Add.
  4. In the Details area, enter a name and description for the overhead method and then select the joint venture to associate the overhead method to.
  5. In the Start Date and End Date fields, enter an effective date range for the overhead method.

    When you schedule the process to calculate overhead, you enter an effective date that coincides with the date range in the overhead method. This determines which overhead method is used to calculate the overhead amount.

  6. Click the Type drop-down list and select Percentage of cost.
    For the status, the default is Editing. When you are ready to use the overhead method to calculate overhead, you must change the status to Active.
  7. Select either an ownership definition or a direct billed stakeholder for the distribution of overhead amounts:

    • Ownership Definition. Select from a list of ownership definitions associated with the joint venture selected above.

      Caution: Most ownership definitions include an ownership percentage for the managing partner. A managing partner is not typically invoiced for overhead, but recoups overhead costs. Therefore, you might need to create a new ownership definition specifically for distributing overhead amounts only to stakeholders other than the managing partner.

    • Direct Billed Stakeholder. Select from a list of active stakeholders associated with the joint venture selected above. Use this option to distribute the entire overhead amount to a single stakeholder.

  8. In the Calculation area, for the Basis Source, select Joint venture billed transactions.
  9. Complete these fields:

    • Percentage. Enter a percentage to use for the overhead calculation.

      Note: You can enter a percentage with up to 6 decimal places. A percentage with more than 6 decimal places is not rounded and will be truncated, for example 10.123456789% will be truncated to 10.123456.

    • Minimum Amount. You can enter a minimum amount to include in the transaction if the calculated amount is less than this amount.

  10. To identify the source of the transactions for the overhead calculation, use the following transaction source fields:

    • Segment. The label of the segment in the chart of accounts that is used to select joint venture distributions for overhead calculations.

      Remember that you can review the labels of distributable segments for your chart of accounts from the Distributable Segments tab on the Account Information page of your joint venture definition.

    • Segment Value. The segment value used to select joint venture distributions for overhead calculations.

  11. In the Invoice area, complete the following fields to set up invoicing for overhead amounts:

    • Partner Account. Identify the offset account for the accounted overhead amount in Oracle Receivables.

      Place your cursor over this field to display the available segment values, and then select the combination of segment values that make up the account ID. Or click the search icon in this field and user filters to identify the segment values.

      The following image shows the "Search for combination" area. It includes a list of segments at the top that you can click to display a search to identify each segment value of the account ID, which in this example is 11-1006-53443-11-0001.

      This image shows the "Search for combination" area which displays the available segments and the drop-down list that enables you identify each segment value that makes up the account ID, which in this example is 11-1006-53443-11-0001.

    • Distribution Type. Select “Overhead” or “Fees and other charges.”

      This value is passed into overhead invoices as the line type and is used for account mapping to assign the partner account to the invoice line.

    • Transaction Description. Enter a description to include in the transactions created for the invoiced overhead amounts.

      For example, if the overhead amount was calculated from a percentage of material costs, you could enter “Overhead for material costs” for the transaction description. The description appears in all invoices created for the distributed overhead amounts.