1. Using Joint Venture Management
  2. Scenario: Reversal and Redistribution for Stakeholders with No Change in Ownership Percentages

Scenario: Reversal and Redistribution for Stakeholders with No Change in Ownership Percentages

This example discusses the reversal and redistribution process when the new ownership definition doesn’t state any change in the ownership percentages for some stakeholders.

Consider the ownership definition illustrated in the following table.

Ownership Definition Name Effective Dates Stakeholders Ownership Percentages
VENTUREOD1 1/01/2019 - 12/31/2019 S1, S2, S3, S4 4 stakeholders, 25% each

Cost transaction T1 was distributed using this ownership definition. Distributions T1D1, T1D2, and T1D3 were invoiced.

Transactions Transaction Date Distributions Stakeholders Percentages of Ownership Invoice Number
T1 6/30/2019 T1D1 S1 25% T1D1inv
T1D2 S2 25% T1D2inv
T1D3 S3 25% T1D3inv
T1D4 S4 25% NA

Stakeholder S1 repeatedly fails to make payment for invoices by the due date. The managing partner, S2, decides to absorb a portion of this stakeholder’s percentage of ownership, effective 6/01/2019. There is no change in the ownership percentages for stakeholders S3 and S4.

To trigger the reversal process, you change the effective end date of the ownership definition to 5/31/2019 as illustrated in the following table.

Ownership Definition Name Effective Dates Stakeholders Ownership Percentages
VENTUREOD1 1/01/2019 - 5/31/2019 S1, S2, S3, S4 4 stakeholders, 25% each

The following table illustrates the new ownership definition with the revised ownership percentages that the process will use to redistribute.

Ownership Definition Name Effective Dates Stakeholders Ownership Percentages
VENTUREOD1 6/01/2019 - 12/31/2019 S1, S2, S3, S4 4 stakeholders, 10% , 40%, 25%, 25% respectively

You activate the option to immediately redistribute the transaction after reversing the distributions.

The reversal process cancels the original distributions T1D1, T1D2, and T1D4 and creates corresponding reversed distributions. Because you opted to automatically redistribute after reversing, the process creates redistributed records for stakeholders S1 and S2 using the new ownership percentages.

Distributions Stakeholders Ownership Percentages Ownership Definition Effective Dates Distribution Line Type
T1D1 S1 25% 1/01/2019 - 12/31/2019 Canceled (original distribution line)
T1D1RV S1 25% 1/01/2019 - 12/31/2019 Reversed
T1D1RD S1 10% 6/01/2019 - 12/31/2019 Redistributed
T1D2 S2 25% 1/01/2019 - 12/31/2019 Canceled (original distribution line)
T1D2RV S2 25% 1/01/2019 - 12/31/2019 Reversed
T1D2RD S2 40% 6/01/2019 - 12/31/2019 Redistributed
T1D3 S3 25% 6/01/2019 - 12/31/2019 Redistributed (original/canceled distribution line)
T1D4 S4 25% 6/01/2019 - 12/31/2019 Redistributed

Distribution T1D3 isn’t reversed because stakeholder S3 was already billed for this distribution and the invoice amount is still valid as there’s no change in the ownership percentage. In this case, the process changes the line type of the original distribution to Redistributed. However, if you ran only the reversal process without activating the redistribute option, a reversed distribution would have been created, which will eventually be deleted by the Create Joint Venture Distributions process.