Example of the Setup and Processing of Nonoperated Joint Ventures
A nonoperated joint venture includes four stakeholders. Stakeholder 1 is the nonoperating partner who uses Oracle Joint Venture Management to record and manage their share of the joint venture costs. Stakeholder 2 is the managing partner (operator) of the joint venture and uses a different process to manage the joint venture. The following table illustrates the ownership percentages of all the stakeholders described in the joint operating agreement:
| Stakeholder | Ownership Percentage |
|---|---|
| Stakeholder 1 (Nonoperator) | 20 |
| Stakeholder 2 (Managing partner) | 40 |
| Stakeholder 3 (Nonoperator) | 20 |
| Stakeholder 4 (Nonoperator) | 20 |
Every month, the managing partner sends the details of the cost transactions created for the joint venture along with the receivables invoice for each stakeholder’s share of costs. Stakeholder 1 needs a copy of these cost transactions to be available in their Oracle Fusion Cloud Financials database to record, manage, and report on their share of the joint venture costs.
The joint venture accountant user associated with this stakeholder imports or manually adds the cost transactions in Oracle Fusion Cloud Financials in accounts that are included in their chart of accounts.
Then, the joint venture accountant sets up the following details in Joint Venture Management:
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Creates invoicing partner records for Stakeholder 1 and 2.
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Creates a joint venture definition, classifying the joint venture as nonoperated. In the joint venture definition, the joint venture accountant adds the following details:
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Accounts in Oracle Fusion Cloud Financials that contain transactions for the joint venture. These accounts are referred to as distributable accounts in Joint Venture Management.
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Two stakeholders, Stakeholder 1 and 2. Stakeholder 1 is set up an internal stakeholder classified as the nonoperator, and Stakeholder 2 is set up as an external stakeholder classified as the operator.
In the stakeholder record for the nonoperator (Stakeholder 1), the joint venture accountant completes the following fields with values that are required for nonoperated joint venture processing:
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Invoicing Partner. Enters the invoicing partner for the operator (Stakeholder 2).
Remember that an invoicing partner record includes information about the supplier. Specifying the invoicing partner for the operator in the stakeholder record for the nonoperator will help ensure that payable invoices are created with the correct supplier details.
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Distribution only. Selects this option so that the process doesn’t create an invoice for the operator’s share of costs.
Although the joint venture has four stakeholders, the joint venture accountant decides to set up only the minimum required to process the share of costs for Stakeholder 1.
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An ownership definition containing the two stakeholders. The ownership percentages for stakeholders 2, 3, and 4 are totaled and specified as the ownership percentage for Stakeholder 2 (managing partner). The following table illustrates the ownership definition:
Stakeholder Ownership Percentage Stakeholder 1 (Nonoperator) 20 Stakeholder 2 (Managing partner) 80
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The setup is complete. The joint venture accountant then runs the Joint Venture Management processes that identify the cost transactions for the joint venture, distribute the transactions using the ownership definition, and create payables invoices to pay the managing partner for the stakeholder’s cost distributions. If the managing partner requests cash advances in the form of partner contributions, the nonoperator can use Joint Venture Management to record the partner contribution they paid to the managing partner and verify the amount drawn against their cost distributions.