1. Implementing Joint Venture Management
  2. Example of Assigning Different Ownership Definitions to Transactions

Example of Assigning Different Ownership Definitions to Transactions

When you need to assign different ownership definitions to different categories of transactions in a joint venture, you can use either of the following options:

  • (Recommended) Set up ownership definition assignment rules that enable Joint Venture Management to automatically assign different ownership definitions to different categories of transactions. See Overview of Ownership Definition Assignment Rules for more information.

  • Manually override the ownership definition for different categories of transactions in the Joint Venture Transactions work area.

This example describes how to set up an ownership definition that you can apply as an override to transactions in the Joint Venture Transactions work area.

A joint venture accountant needs to create ownership definitions to calculate splits based on certain conditions in the joint operating agreement (JOA).

The managing partner uses Cost Center A to manage the financials for the joint venture. In accordance with the conditions in the JOA, the accountant creates the following ownership definitions for the first three operating months of the joint venture:

  • A default ownership definition for splitting the majority of transactions.

  • An ownership definition for splitting transactions that contain expense amounts over 25 thousand.

The following table provides more details about each ownership definition:

Ownership Definition Effective Dates Default – Y/N Purpose
VENTUREOD_COSTCENTER_A 1/01/2019 – 3/31/2019 Yes

Process splits of transactions for Cost Center A, with the following ownership percentage breakdown:

4 stakeholders, 25% each
VENTUREODCCA_EXP_OVER25K 1/01/2019 – 3/31/2019 No

Use as an override to process splits of transactions from Cost Center A with expenses over 25 thousand. Includes the following ownership percentage breakdown:

2 stakeholders, 50/50 split

After the transactions are identified, the accountant uses the Joint Venture Transactions work area to search for transactions that need to be split by the ownership definition other than the default. The following table shows the transactions the accountant searches for and the ownership definition the accountant assigns to the transactions:

Transactions Ownership Definition Assigned
Cost Center A with expenses over 25 thousand VENTUREODCCA_EXP_OVER25K