When you set up a joint venture, you must start by determining who the partners involved in the joint venture are. You must also establish the percent of interest in the joint venture, know as the Division of Interest (DOI). The DOI is used to calculate the distribution of expenses and revenue associated with the joint venture.
A DOI contains a list of all partners involved in a joint venture sorted by the effective date. Multiple DOIs are necessary when the ownership percentage differs for specific expenses or revenue within the joint venture.
Creating a Division of Interest
To create a Division of Interest, access the DOI Master program (P09J20). On the Create Division of Interest header form, you must establish a name, description, and effective data for the DOI. When you save the form, the system will display the Edit Division of Interest form. This is where you will enter the list of partners, the percents of interest, and other details. Select the Rounding Partner checkbox within a partner’s detail line to ensure that any rounding partners receive the rounding difference that occurs when splitting transactions between the partners.
You can select the Invoice/Voucher Insider checkbox if you want to create invoices and vouchers for insider partners. You will create invoices and vouchers for the outside partners to build them for joint venture expenses and pay them for revenue. This means that the Invoice/Voucher Insider checkbox is not available to check for outside partners.
Select the Distribution Only checkbox for a partner if you want to only calculate the distribution of expenses and revenue for that partner but do not want to create invoices or vouchers for them. When the percents of interest for each partner total up to 100, the DOI is complete and ready to be used.
Change the status of the DOI to “Active” instead of “In Progress” if you are ready to activate it.
Assigning DOI Rules
To use the DOI you have created, you must assign the DOI to any level within the joint venture hierarchy. You can assign the DOI at the company, joint venture, project, or business unit level. To assign DOIs, create assignment rules in the Division of Interest Assignment Rules program (P09J22). Depending on your business requirements, you might require several assignment rules to determine which DOI should be used for financial transactions.
For example, if the majority of your transactions use one DOI, you can set up a rule at the company level with this DOI. However, there may be some transactions—for example, those associated with a specific GL account—that require the transaction amount to be distributed differently among the partners. In such a case, you can set up an assignment rule with the account information.
Assign the DOI to a Joint Venture
To set up an assignment rule to assign the DOI you created to a joint venture, access the DOI Rules application (P09J22). On the Revise Division of Interest Assignment Rules form, enter values in one or more of the following fields:
- Joint Venture Name
- Project Number
- Business Unit
In the example in the video below, a value was added in the Joint Venture Name field. You can also specify a range of accounts and subsidiaries to which you want to assign the DOI. Then, enter the name of the DOI that you created. During the distribution process, the system will assign this DOI to joint venture distribution transactions recorded in the accounts that you have specified.
If you want the entire amount to billed directly to a single partner, you can specify the partner instead of specifying a DOI. Use the “Direct Billed to Outside Partner” or “Direct Billed to Insider BU” fields on the Revise Division of Interest Assignment Rules form for this purpose.
Joint Venture Management Overview
The JD Edwards EnterpriseOne Joint Venture Management solution is part of JDE E1 Financial Management. So, if you have a license to JD Edwards EnterpriseOne Financial Management, you are already authorized to use the Joint Venture Management feature. This solution can be used to manage joint ventures in any industry.
With Joint Venture Management, you can manage all aspects of a joint venture, including:
- Defining the joint venture as a legal entity
- Defining the attributes for the joint venture
- Recording the list of partners that are approvers of the joint venture
- Tracking the approval date for those partners
- Defining the date-effective percentage of ownership of a joint venture
- Defining the accounts to distribute expenses and revenue among the partners in the joint venture
- Calculating overhead and creating journal entries for the calculate overhead amounts
- Allocating indirect costs incurred by the managing partner to the joint venture business units and creating journal entries of the allocated amounts
- Retrieving distributable expenses based on the parent-child hierarchy for projects and business units
- Overriding the percentage of ownership at the account of transaction level
- Distributing expenses by calculating the pro rata share of each joint venture partner based on the date-effective percentage of ownership
- Creating invoices to bill and vouchers to pay the partners’ share of the joint venture expenses, capital costs, and revenue
- Recording the share for the managing business unit or other inside partners
This solution is available for JD Edwards EnterpriseOne Applications release 9.2. In order to use the optional UX One content for Joint Venture Management, you will need a minimum Tools release of 9.2.2.
To learn more about Joint Venture Management and assigning a Division of Interest, check out the video and Quest resources attached below or follow the Creating and Managing Joint Ventures in JD Edwards EnterpriseOne learning path from LearnJDE.
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