Example of When Reversal by Updating the Ownership Definition Includes Previously Reversed Distributions
In this example, you'll see how distributions that have been manually reversed and reassigned are included again for reversal due to a change in the ownership definition.
Consider a joint venture ownership definition with two stakeholders having ownership percentages as illustrated in the following table.
| Stakeholder | Ownership Percentage | Ownership Definition Effective Dates |
|---|---|---|
| Stakeholder 1 | 45 | 1/01/2019 - 12/31/2019 |
| Stakeholder 2 (Managing partner) | 55 |
Distributions T1D1 belong to Stakeholder 1 and T1D2 to Stakeholder 2. Stakeholder 1 raised a concern about incorrect information in the invoice created from their distribution T1D1. The joint venture accountant proceeds to reverse this distribution manually and reassign it to Stakeholder 3 who has agreed to absorb this distribution.
The following table illustrates the newly created reversed and reassigned distributions that are created, T1D1RV and T1D1RA. The distribution T1D1RA is reassigned to Stakeholder 3.
Note that Stakeholder 3 is not included in the ownership definition.
| Stakeholder | Distribution | Distribution Status | Distribution Line Type |
|---|---|---|---|
| Stakeholder 1 | T1D1 | Process Complete | Canceled |
| Stakeholder 1 | T1D1RV | Available to Process | Reversed |
| Stakeholder 3 | T1D1RA | Available to Process | Reassigned |
| Stakeholder 2 (Managing partner) | T1D2 | Process Complete | Original |
The joint venture accountant then processes the reversed distribution T1D1RV to create a credit memo and the reassigned distribution T1D1RA to create an invoice. The statuses of these distributions change to “Process Complete.”
This completes the manual reversal process. You’ll now see how these distributions are impacted due to an ownership definition change, requiring them to be reversed again.
There’s a change in the ownership percentages, effective from 6/01/2019 to 12/31/2019. The distributions that have the transaction dates on or within this new effective date range need to be reversed and redistributed using the revised ownership percentages. The following table illustrates the new ownership definition that will be used to redistribute the transaction.
| Stakeholder | Ownership Percentage | Ownership Definition Effective Dates |
|---|---|---|
| Stakeholder 1 | 35 | 6/01/2019 - 12/31/2019 |
| Stakeholder 2 (Managing partner) | 65 |
To trigger the automatic reversal and rebilling process, the joint venture accountant changes the effective end date of the original ownership definition from 12/31/2019 to 5/31/2019. This change in the ownership definition end date identifies the distributions for reversal.
The joint venture accountant then runs the reversal and redistribution processes. The resulting impact in the distributions is described in the following table and in the points that follow:
| Stakeholder | Distribution | Distribution Status | Distribution Line Type |
|---|---|---|---|
| Stakeholder 1 | T1D1 | Process Complete | Canceled |
| Stakeholder 1 | T1D1RV | Process Complete | Reversed |
| Stakeholder 3 | T1D1RA | Process Complete | Canceled |
| Stakeholder 3 | T1D1RV | Available to Process | Reversed |
| Stakeholder 3 | T1D1RD | Available to Process | Redistributed (Using the ownership percentage of Stakeholder 1) |
| Stakeholder 2 (Managing partner) | T1D2 | Process Complete | Canceled |
| Stakeholder 2 (Managing partner) | T1D2RV | Available to Process | Reversed |
| Stakeholder 2 (Managing partner) | T1D2RD | Available to Process | Redistributed |
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For Stakeholder 1, there’s no change in the distributions because the original distribution (T1D1) has already been canceled and a credit memo created for the reversed distribution (T1D1RV).
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For stakeholder 3, the reassigned distribution (T1D1RA) goes through the reversal and redistribution process, creating a reversed distribution, T1D1RV, and a redistributed record, T1D1RD. Note that the ownership percentage for Stakeholder 1 is used as the ownership percentage for Stakeholder 3 during redistribution.
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For stakeholder 2 (managing partner), distribution T1D2 has never been reversed, so the process cancels the original distribution T1D2 and creates a reversed distribution T1D2RV.