A JD Edwards video walked through how to set up accounting information for Joint Venture Management in JD Edwards EnterpriseOne.
The video aimed to help users:
- Understand distributable accounts
- Set up distributable accounts
- Understand Automatic Accounting Instructions (AAI) for Joint Venture Management
- Set up AAIs for revenue, capital cost, and expense account ranges
- Set up cutback AAIs
- Set up overhead AAIs
- Set up AAIs for cash calls
How to Set Up Accounting Information for Joint Venture Management
Understand and Set Up Distributable Accounts
Many types of transactions are processed by the managing partner of a joint venture. The managing partner pays bills, receives revenue, and tracks the assets and liabilities associated with the joint venture. Each partner is interested in knowing not only how the joint venture is doing as a whole, but also what their share represents. Partners are also responsible for paying their share of the cost and expect to receive their share of the revenue.
To accomplish this, the transaction amounts are distributed to the partners based upon the division of interest (DOI). To ensure that only those accounts which the partners have determined should be distributed, part of the joint venture set up is to identify those accounts as distributable. To do so, use the Joint Venture Distributable Accounts program.
Understand Automatic Accounting Instructions (AAI) for Joint Venture Management
Automatic Accounting Instructions (AAIs) are rules that define the relationship between your day-to-day accounting functions and your chart of accounts.
After you have identified the accounts that are included in the joint venture, you must set up AAIs to identify revenue account ranges, expense account ranges, and capital cost account ranges for joint venture management. The system uses AAIs to determine which accounts are for revenue, expense, and capital costs and designates the account type for each distributable transaction for later processing.
If the account type is revenue, the system pays the partner for the transaction. If the account type is expense or capital cost, the system bills the partner.
Use codes JVR01-JVR99 to create the revenue account ranges. Use codes JVE01-JVE99 to create the expense account ranges, and use codes JVC01-JVC99 to create the capital cost account ranges.
Set Up Automatic Accounting Instructions (AAI) for Joint Venture Management
Set Up AAIs for Revenue, Capital Cost, and Expense Account Ranges
Access the Automatic Accounting Instructions program (P0012).
To set up the AAI for the beginning revenue range, complete the item number field with the value JVR01 and complete the rest of the fields in the header.
When you define a range, you specify the object account and subsidiary values only.
In the account code section, select the business unit as “Not Used.” Enter the object account and select the “Required” option. You can select the subsidiary as “Optional.”
Enter beginning revenue in the first field in the Account Use Description section.
Similarly, set up the AAI for the ending revenue range – for example, in this case, use JVR02.
The image below shows the revenue AAIs that have been set up.
You must also set up the beginning and ending AAIs for the joint venture expense account range JVE01-JVE02 and for the joint venture capital cost range JVC01-JVC02 by following the same process for revenue AAIs.
Set Up Cutback AAIs
After you set up the AAIs for the transactions, you will also need to set up the cutback AAIs for the cutback accounts. The system uses cutback accounts to create offset entries in the account ledger table when you create invoices, vouchers, and journal entries to bill and pay partners for the share of cost and revenue.
The cutback AAIs are:
- JVCBE to create the expense cutback account
- JVCBR to create the revenue cutback account
- JVCBC to create the capital cost cutback account
Access the Automatic Accounting Instructions program (P0012). Set up the AAI for JVCBE for the expense cutback account. Enter “Cutback Account for Expenses” as the Account Use Description. The system uses this cutback account to create the balancing entry for invoices and journal entries.
Similarly, you must set up the JVCBR AAI for the revenue cutback account and JVCBC for the capital cost cutback account. The revenue cutback account will be used to create the balancing entry for vouchers and journal entries. The capital cost cutback account will be used to create the balancing entry for invoices and journal entries.
Set Up Overhead AAIs
You must also set up the AAIs for overhead. The system uses these AAIs when processing the overhead amounts to create journal entries to distribute to the partners.
The overhead AAIs are:
- JVOHE to create the overhead expense account
- JVOHO to crate the overhead offset account
Set up the AAI JVOHE for the overhead expense account and the AAI JHOVO for the overhead offset account. The image below shows the overhead AAIs that have been set up.
Set Up AAIs for Cash Calls
You must also set up AAIs for processing cash calls if you are using cash calls to manage the cash flow for the expenses associated with your joint venture.
The three AAIs for cash calls include:
- JVCxxx for partner contributions
- JVJxxx for the journal entry offset account
- JVAxxx for the agreement default charge account
The xxx on the AAI definition represents the joint venture GL offset code that you specify in the Joint Venture Master program (P09J30). The GL offset code can be used to define a different account for each joint venture.
Set up the AAI JVCxxx. This AAI defines the account that holds the current balance of partner contributions. The system uses this account in the transactions for cash calls.
Next, set up the AAI JVJxxx. When you create a journal entry to close and refund a cash call, the system uses the account that you define in this AAI to create the offset entry.
Also, you need to set up the AAI JVAxxx for the agreement default charge account. An agreement default charge is the amount that a joint venture partner must pay for backing out of the joint venture. When you create a journal entry or a voucher to close and refund a cash call, the system uses the account that you define in this AAI to create the credit entry for the agreement default charge.
To learn more about how to set up accounting information for Joint Venture Management, visit the learning path “Creating and Managing Joint Venture in JD Edwards EnterpriseOne” on www.learnjde.com and check out the video below.