Derive Cutback Accounts for Carried Interest Cost Amounts

Carried interest journals for costs include lines with distribution amounts that can be from different transaction sources. For each line, an invoice distribution is created in the Revenue accounting class using the original account of the source transaction. You can use this account for the cutback account, or you can define a different cutback account to use for each transaction source. The transaction sources can include:

Cost transactions in subledger accounting and general ledger (distribution types E, A, or B)
Manual cost joint venture source transactions created in Oracle Joint Venture Management (distribution type S)
Overhead transactions generated by Joint Venture Management (distribution types H or F)

Determine the Cutback Account for Carried Interest Costs that Originate from Subledger Accounting, General Ledger, or Manual Joint Venture Source Transactions

Here are your options for the cutback account for distributed carried interest costs that originate from general ledger, subledger accounting, or manual joint venture source transactions:

Cutback Account Option	Business Purpose	Implementation Action
Use the account on the source transaction.	With this option, the balance of the accounts from the source transaction will contain the net amount for the managing partner.	This option is enabled by default. Caution: If you use this option, when users set up joint venture definitions, they must enable the “Exclude joint venture transactions” option. This prevents these transactions from being identified and processed by Joint Venture Management. See Exclude Joint Venture Invoices and Journals from Oracle Joint Venture Management Processing for more information.
Use a different account than the account on the source transaction.	With this option, all balances of the accounts from the source transaction will contain the gross amount for the joint venture.	Set up subledger accounting rules to override the source transaction account with a different account. See Use Subledger Accounting Rules to Derive the Cutback Account for Carried Interest Cost Amounts for more information. Caution: If you use this option, when users set up joint venture definitions, they must perform either of the following actions: Enable the “Exclude joint venture transactions” option in each joint venture. When identifying distributable accounts for the joint venture, they must make sure the cutback account isn’t included in the list of distributable accounts.

Cutback Account Option

Business Purpose

Implementation Action

Use the account on the source transaction.

With this option, the balance of the accounts from the source transaction will contain the net amount for the managing partner.

This option is enabled by default.

Caution:

If you use this option, when users set up joint venture definitions, they must enable the “Exclude joint venture transactions” option. This prevents these transactions from being identified and processed by Joint Venture Management. See Exclude Joint Venture Invoices and Journals from Oracle Joint Venture Management Processing for more information.

Use a different account than the account on the source transaction.

With this option, all balances of the accounts from the source transaction will contain the gross amount for the joint venture.

Set up subledger accounting rules to override the source transaction account with a different account. See Use Subledger Accounting Rules to Derive the Cutback Account for Carried Interest Cost Amounts for more information.

Caution:

If you use this option, when users set up joint venture definitions, they must perform either of the following actions:

Enable the “Exclude joint venture transactions” option in each joint venture.
When identifying distributable accounts for the joint venture, they must make sure the cutback account isn’t included in the list of distributable accounts.

Determine the Cutback Account for Carried Interest Costs that Originate from Overhead Transactions Generated by Oracle Joint Venture Management

Cutback Account Option	Business Purpose	Implementation Action
Use the account on the overhead transaction.	You want to use the cost recovery or revenue account defined on the overhead method. You don’t need to specify a different account.	When setting up an overhead method for calculating overhead costs for a joint venture, a joint venture accountant specifies a partner account in the overhead method. This is the account for the cutback, to account for the overhead amounts for the managing partner. This account can be either a cost recovery account or a revenue account. Caution: If you use this option, the cost recovery or revenue account specified on the overhead method should not be a cost account for the joint venture.
Use a different account than the account on the overhead transaction.	This option provides the flexibility to use subledger accounting rules to determine the cutback account.	Set up subledger accounting rules to override the account from the overhead transaction with a different account. See Use Subledger Accounting Rules to Derive the Cutback Account for Carried Interest Cost Amounts for more information. Caution: If you use this option, the cost recovery or revenue account specified on the overhead method should not be a cost account for the joint venture.

Cutback Account Option

Business Purpose

Implementation Action

Use the account on the overhead transaction.

You want to use the cost recovery or revenue account defined on the overhead method. You don’t need to specify a different account.

When setting up an overhead method for calculating overhead costs for a joint venture, a joint venture accountant specifies a partner account in the overhead method. This is the account for the cutback, to account for the overhead amounts for the managing partner. This account can be either a cost recovery account or a revenue account.

Caution:

If you use this option, the cost recovery or revenue account specified on the overhead method should not be a cost account for the joint venture.

Use a different account than the account on the overhead transaction.

This option provides the flexibility to use subledger accounting rules to determine the cutback account.

Set up subledger accounting rules to override the account from the overhead transaction with a different account. See Use Subledger Accounting Rules to Derive the Cutback Account for Carried Interest Cost Amounts for more information.

Caution:

If you use this option, the cost recovery or revenue account specified on the overhead method should not be a cost account for the joint venture.