Joint Venture Accounting (JVA)

Purpose
Companies typically form joint venture partnerships to minimize risks involved in capital intensive operations that demand a long payback period. A joint venture partnership consists of an operating partner (operator) and one or more non-operating partners who combine monetary or personnel resources to share a project s e!penses and revenues. "he operator manages the venture# arranges venture activities# and maintains accounting records. "he operator remits venture e!penses# collects revenues# and distributes these to the partners# according to their ownership shares. $A% &'A is a complete accounting system for joint ventures.

1. Introduction to Joint Venture Accounting (JVA)

Definition
$A% designed &'A for joint venture operations. $A% &'A captures all e!penditures and other joint venture transactions by using functions from (inancial Accounting ($A% ())# Controlling ($A% C*)# Asset +anagement ($A% A+)# +aterials +anagement ($A% ++)# %lant +aintenance ($A% %+)# and %roject $ystem ($A% %$). ,y working closely with customers and implementation partners# $A% ensures that &'A facilitates smooth management of joint ventures# with great fle!ibility for growth.

1.1 Joint Venture Accounting (JVA) Objects

Definition
"he primary $A% &'A objects are described in the following table. Object name Description Joint Operating Agreement (JOA) A &*A is a formal agreement that specifies the conditions for a joint operation. "his covers the interests of the partners and their properties# as well as overheads and penalties. Joint Venture "his is an association of two or more partners# formed to share a venture s risks# costs# and revenues. -ach partner s share is proportional to their undivided interest in the venture. Equit ! pe "he &*A has different development stages# such as engineering and design# construction# and production. .ifferent partners participate at each stage. &'A manages the different stages by using e/uity types. An e/uity type e!plains a particular association of partners. "his definition may be related to time# phase or purpose and is linked with a specific e/uity group. Equit "roup An e/uity group represents an association of venture partners and their interests. An e/uity group may consist of all or some of the venture partners. Joint Venture Partner "his is a partner mentioned in the &*A with an undivided interest in a venture. *ne partner# called the operator# manages the operation. "he remaining non-operating partners share e!penses and revenues. #eco$er and %i&&ing Indicators 0ou assign a recovery indicator to a cost object to indicate whether or not e!penses# posted using the cost object# are billable to &'A partners. 0ou assign billable costs to the appropriate partners. 1on-billable e!penses are assigned to the operator. ,illing indicators are assigned to billable postings and identify the type of posting involved# including cash call# normal e!penditure# and audit adjustment.

'se
"he &*A specifies the relationship between partners# joint ventures# and rules for cost calculations. &oint ventures# e/uity types# and e/uity groups are assigned to a &*A. &oint venture partners are assigned to e/uity groups. A joint venture can belong to only one &*A. 2owever# multiple ventures can belong to the same &*A. 0ou can assign multiple e/uity groups to one &*A# and you can assign the same e/uity group to multiple joint ventures.

(tructure

"he following diagram shows the relationship between $A% &'A objects. (AP JVA %usiness Object (tructure

Common $A% &'A activities include setting up and maintaining &'A objects.

1.) JVA Integration Acti$ities

'se
$A% &'A data is linked to data in other $A% components. "he &oint 'enture )ntegration +anager (&')+) is the interface between documents created in a standard $A% component and $A% &'A. "he &')+ processes documents booked in a standard $A% component that have &'A related data# and then produces an $A% &'A document. Conversely# the &')+ transfers documents booked in $A% &'A to the relevant standard component and then a document is created in the standard component. $A% &'A receives the following documents3

++ documents 4 $A% &'A receives only those documents that also update (). $. documents 4 $A% &'A receives only documents that will also update () (especially invoices). $tatistical and parked documents are e!cluded. C* documents 4 $tatistical lines are e!cluded. ()-$5 documents 4 $A% &'A will only use actual documents that have a 6) or billing indicator.

Integration
$A% &'A receives the original documents and creates additional &'A documents. "he $A% &'A documents contain additional venture information# including the joint venture# e/uity group# and recovery (6)) indicator. $ome lines of the $A% &'A document can be split# such as the vendor# customer# and ta! information lines. JVI* +ine Item (p&itting "he &')+ splits relevant document lines (ta! lines# discount lines# vendor lines) based on the venture and cost object information of the split basis lines. -ach relevant document line is split into as many lines as there is different venture and cost object information in the split basis. (or e!ample# the following () document has document lines 7# 8# 9 as split basis# while document lines : and ; are subject to splitting. +ine : 7 8 9 ; Account 'endor +aterial +aterial +aterial "a! ,ost Object CC: CC: CC7 Venture ': ': '7 Eq"r -: -: -7 #I ,) ,) ,) Amount <#<==7#=== 8#=== 9#=== <==

"he three split basis lines contain two different combinations of venture and cost object information# such that document lines : and ; are split in the $A% &'A document as follows3 +ine : 7 8 9 ; > ? Account 'endor 'endor +aterial +aterial +aterial "a! "a! ,ost Object CC: CC7 CC: CC: CC7 CC: CC7 Venture ': '7 ': ': '7 ': '7 Eq"r -: -7 -: -: -7 -: -7 #ecInd ,) ,) ,) ,) ,) ,) ,) Amount ;#;==9#9==7#=== 8#=== 9#=== ;== 9== -I +ine : : 7 8 9 ; ;

0ou can split lines into as many lines as dictated by the split basis. )n addition# the $A% &'A document stores information on which split basis line relates to a specific line that was split. "o allow this# there are two fields in the $A% &'A document table JVSO13 o o XSBL is marked if the document line is part of the split basis. SBREFLN contains a running number that links the split basis lines to the split lines.

)f you split lines as dictated by the split basis the $A% &'A document would look like the following table3 +ine Account : 'endor 7 8 9 ; > ? A < 'endor 'endor +aterial +aterial +aterial "a! "a! "a! ,ost Object Venture CC: ': CC: CC7 CC: CC: CC7 CC: CC: CC7 ': '7 ': ': '7 ': ': '7 Eq"r -: -: -7 -: -: -7 -: -: -7 #I ,) ,) ,) ,) ,) ,) ,) ,) ,) Amount 7#7==8#8==9#9==7#=== 8#=== 9#=== 7== 8== 9== -I +ine (p&it. (p&it basis : : : : 7 8 9 ; ; ; 7 8 : 7 8 : 7 8 @ @ @

Effects on ,ustomi/ing
0ou can use the &')+ line splitting functions on company code level within the implementation guide ()+B) for $A% &'A. "o do this# use the following menu path in the )+B3 &oint venture accounting -C -nvironment -C &'A Company Configuration -C .etailed .ata and select the flag D$plit by line itemD. All $A% &'A documents have the following identifying information3 #eference document number - links the $A% &'A document to the original document #eference document &ine - links the $A% &'A line to the original document line #eference acti$it - contains the original activity (for e!ample# 6(,E for most () documents) JVA document number - identifies the document with a uni/ue joint venture number JVA acti$it - contains the e!ecutable joint venture activity

JVA acti$it "he &'A activity is derived from the original activity. )t can have the following values3 Joint Venture ,utbac0 (JV,%) &'C, is an activity that is set for all B,=: postings created during cutback. )t is not used for the () postings created by Cutback. Joint Venture ,O (JV,O) &'C* is set for all joint venture documents created from C* documents. $ome C* processes create both a C* and an () document. )n this case# this activity is only used for the joint venture document created from the C* document. Joint Venture Equit ,1ange (JVE,) &'-C is used for all B,=: postings created in the pre-cutback e/uity change phase. Joint Venture -I (JV-I) &'() is used for all joint venture documents created from () or $. documents. Joint Venture ** (JV**) &'++ is used for all joint venture documents created from ++ documents. Joint Venture Production *ont1 (JVP*)

&'%+ is used for production month processing. "his allows you to update an additional ()-$5 ledger for documents that originate in () and ++. &'%+ documents are created if the production month field %6*.%-6 in &'$*: is complete. All document lines with an entry in the %6*.%-6 field will result in the following3 A line is created in the first new document with posting date# production month# and activity &'%+. "his document posts the values under the production month period. A new line is created in the second document with the normal posting date# activity &'%+# and reversed amounts and /uantities. "his document reverses the () view for this ledger.

6eport writer# allows you to report on 5edger 9A or on an ()-$5 ledger with the usual joint venture activities# to get the financial view. 0ou can also report on a ledger with the financial view and on a ledger with activity &'%+ to get the view for the production month. "o complete the field in &'$*:# you must use the joint venture substitution. %ossible entry fields include the document date (header) or field A,%-6 (line level). Joint Venture (uspense (JV(1) &'$: is set for all postings initiated from the suspense process. Joint Venture 'nsuspense (JV()) &'$7 is set for all postings initiated from the unsuspense process. %a&anced %oo0s b Venture (JVJV) &'&' can appear in all types of joint venture documents. )t is set for the balanced books by venture lines# which are additional lines in the joint venture document with reference document line zero. -ven though the activities listed below begin with the letters & or &'# they are derived from the originating application and are only used as a reference activity3 o o o o o o o o JVI' 4 &oint 'enture Actual Assessment JVIV 4 &oint 'enture Actual .istribution J#I' 4 $egment 6everse Actual Assessment J#IV 4 $egment 6everse Actual .istribution J#P' 4 $egment 6everse %lan Assessment J#PV 4 $egment 6everse %lan .istribution JVP+ 4 &oint 'enture %lan .ata from C* JV'1 4 &oint 'enture Actual %rimary Cost "ransfer

Prerequisites
"o create a link between $A% components# several configuration prere/uisites are re/uired before you set up and activate a company in $A% &'A. 0our system administrator or implementation team must complete these steps prior to setting up $A% &'A master data or performing transactions. A list of these prere/uisites is presented in the beginning of each chapter. 0ou should refer to the )+B for detailed information regarding configuration. "o ensure document values correspond between applications# you must set all fields in the $A% &'A tables to unchangeable in () configuration. "o set the fields to unchangeable# you clear the Field is modifiable indicator on the Document Change Rules: Details screen. "he activity# 6(6F G6econciliation posting C* C ()G# is not used in $A% &'A because $A% &'A uses the C* transactions directly.

1.2 Joint Venture Accounting (JVA) Processes

Definition
"he following is a list of primary $A% &'A processes3 +aterial and asset transfers between ventures Allocations and settlement with ventures -/uity group change management -/uity group suspense %artner carried interest Cash calls %artner netting (e!pense with revenue) %arallel currencies %artner billing including -.) inbound H outbound Cutback to venture partners including intercompany Joint venture audit reporting

). *aster Data
Definition
$A% &oint 'enture Accounting (&'A) master data covers the following areas3 Creating and Changing &oint *perating Agreements $etting Ep -/uity Broups $etting Ep and Changing a &oint 'enture Assigning -/uity Broups and -/uity "ypes $etting up &oint 'enture Accounting Cost *bjects3 *verview Creating and Changing Cost Centers Creating and Changing )nternal *rders Creating and Changing %rojects and Iork ,reakdown $tructures +aintaining and Changing ,usiness %artners $uspending and 6emoving %rojects# %artners# and -/uity Broups from $uspense )ntercompany +apping +aintaining %repaid )nventory +aterials

).1 Joint Operating Agreements (JOAs)

Definition
A &*A is a contract specifying the conditions of a joint venture operation. &*As range in comple!ity. A &*A can include provisions for legal# ta!# financial# engineering# and other considerations negotiated by the venture partners. Iithin $A%# the &*A relates active joint ventures and e/uity groups to ensure proportional distribution of costs to the partners during cutback. "he &*A also allows for overhead calculations and non-consent and non-signatory penalties that can be included in the costs distributed during cutback. )n the $A% &oint 'enture Accounting (&'A) component# the key data objects of a &*A are3 &oint ventures -/uity groups - an e/uity group contains a group of &'A partners Cost calculations rules# percentages# and sets of e!cluded accounts for the joint ventures in the &*A %enalty categories for carried interest (C)) and net profit interest (1%)) processes

).1.1 ,reating a Joint Operating Agreement (JOA)

Prerequisites
0our system administrator or implementation team should set up the following prere/uisites in (inancial Accounting (()) and &oint 'enture Accounting (&'A) before you create a &*A3 &oint venture company &*A number range &*A class () customer (AJ%) and vendor (AJ6) accounts for the joint venture partners to be assigned to e/uity groups within the &*A *enu Pat1 1. *n the SAP Easy Access menu# choose Joint venture accounting Master data Joint o erating agmt Maintenance. 2. *n the Joint ! erating Agreement: "nitial screen# choose Create "he Joint ! erating Agreement:Create screen appears.

Procedure

:. 5eave the Joint ! er# Agr field blank on the Joint ! erating Agreement: Create screen if your system is configured to assign the code automatically. -nter a code for the new &*A in the Joint ! er# Agr field if your system is configured to assign the code e!ternally. "he range of possible &*A codes has been set up in the configuration of your system. &*A codes are either automatically assigned by the system (Internal Code) or assigned by the user (External Code) 7. -nter the Com any code. 8. -nter the J!A class. 9. )f you are using an e!isting &*A as a model for the new &*A# enter the code for the model &*A in the Reference Joint ! er# Agr field. ;. Choose -1"-6. "he Create Joint ! erating Agreement $asic Screen will be displayed. >. -nter a &*A description in the Descri tion field. ?. Choose $A'-. "he system returns to the initial screen. A system message confirms that the &*A has been created.

).1.) ,1anging a Joint Operating Agreement (JOA)

Prerequisites
*enu Pat1 1. *n the SAP Easy Access menu# choose Joint venture accounting Master data Joint o erating agmt Maintenance. 2. *n the Joint ! erating Agreement: "nitial screen# choose Change "he Joint ! erating Agreement:Change screen appears.

Procedure
:. -nter the &*A code in the Joint ! er#Agr field on the Joint ! erating Agreement: Change screen. 7. Choose from the following functions3 $asic screen E%uity grou s Cost calculations Penalty cat#rec#& 8. -nter your changes. 9. $A'-. A system message confirms that the &*A has been changed.

De&ete JOA #eport *odification "o delete a &*A in the use the following path in the implementation guide ()+B)3 *n the Dis lay structure menu# choose Joint venture accounting 'ools Productive start Delete a J!A# "he report that is generated with the &*A .elete program has been modified to show why the &*A cannot be deleted. "he ventures associated with the &*A are listed. (or e!ample# when the program is run in test mode# the following two items could appear on a report3 'enture '====: has been assigned to I,$ element ======7; 'enture '=<A?> will be deleted

).1.2 Disp&a ing a Joint Operating Agreement (JOA)

Prerequisites
*enu Pat1 1. *n the SAP Easy Access menu# choose Joint venture accounting Master data Joint o erating agmt Maintenance. 2. *n the Joint ! erating Agreement: "nitial screen# choose Dis lay. "he Joint ! erating Agreement:Dis lay screen appears.

Procedure
:. -nter the &*A code in the Joint ! er#Agr field on the Joint ! erating Agreement: Dis lay screen. 7. Choose from the following functions3 $asic screen E%uity grou s Cost calculations Penalty cat#rec#&

).) Equit "roups

Definition
An e/uity group represents a specific association of partners and their working interests within a venture. *ne of the partners is the operator# who manages the venture and is typically associated with the $A% company code# while the other partners are called non-operators. "he operator collects all costs and bills the non-operators# based on their interests defined in the active e/uity group. Active e/uity groups are associated with an e/uity type which gives meaning to the current e/uity group. "he same e/uity group can participate in several distinct ventures# but it can be used only once in a venture. An e/uity type describes the reason for a particular association of partners. "his definition may be related to time# phase or purpose# and is linked to a specific e/uity group. An Association of Partners

'se
"he way you assign the ownership percentage when you set up an e/uity group determines the type of ownership that the e/uity group represents. "he particular pattern of ownership of an e/uity group determines the type of joint venture to which it can be assigned. "here are four types of e/uity groups and four corresponding venture types. "he venture type is automatically assigned to the e/uity group after you specify the ownership percentages and the partnerKs share. ! pes of Equit "roups Operated (3it1 and 3it1out ta4) "he company using $A% &'A operates this venture. "o assign ownership percentages to an ! erated e/uity group on the Joint ! erating Agreement: E%uity (rou s screen# you should indicate the operating ownership of the company using $A% &'A in the ! erShare field. "he )on! Share field remains blank. "o specify the non-operating partners percentages of ownership# you access the Joint ! erating Agreement: Partner Shares screen and enter the percentages for each non-operating partner. )n the case of an ! erated e/uity group# the sum of the percentage entered in the ! erShare field on the Joint ! erating Agreement: E%uity (rou s screen and the percentages entered for all non-operating partners on the Joint ! erating Agreement: Partner Shares screen should e/ual :==L ownership. 5on6Operated )n a non-operated venture# the company running $A% &'A holds a non-operated share of the venture# and is billed by the operator for its share of venture e!penses. "o assign ownership percentages to a )on*o erated e/uity group# you should indicate the non-operating ownership of the company using $A% &'A in the )on! Share field on the Joint ! erating Agreement: E%uity (rou s screen. "he ! erShare field remains blank. 0ou do not need to access the Joint ! erating Agreement: Partner Shares screen to enter partner percentages since the company running $A% &'A is the non-operating partner in this type of ownership arrangement. 5on6Operated On6%i&&ing )n a non-operated on-billing venture# the company running $A% &'A sells part of its non-operated share of the venture to third parties. "he company running $A% &'A distributes portions of the billings it receives from the venture operator to the partners in its non-operating share# in effect acting as an operator to these third party partners. "o assign ownership percentages to a )on*o erated !n*billing e/uity group on the Joint ! erating Agreement: E%uity (rou s screen# you should indicate the total percentage ownership of the properties held by the company running $A% &'A in the )on! Share field. 0ou should also indicate the portion of that ownership in the properties that the company running $A% &'A will retain in the ! erShare field. 0ou should then indicate the portion of the non-operating ownership in the properties that the company running $A% &'A sells off to on-billing partners on the Joint ! erating Agreement: Partner Shares screen. )n the case of a )on*o erated !n*billing e/uity group# the sum of the percentage entered in the ! erShare field on the Joint ! erating Agreement: E%uity (rou s screen and the percentages entered for all non-operating partners on the Joint ! erating Agreement: Partner Shares screen should e/ual :==L of the total non-operating ownership held in the properties by the company running $A% &'A.

,orporate )n a corporate venture# the company running $A% &'A holds :==L interest. *nly one primary corporate venture and e/uity group should e!ist# as designated on the Com any (lobal Parameters screen in $A% &'A configuration. -!penses booked in the $A% &'A company without $A% &'A information (such as venture and e/uity group) will be assigned to the corporate venture and e/uity group. "hese postings are not shared by partners. A corporate e/uity group can be assigned to a regular operated or non-operated venture as well as to a corporate venture. A corporate e/uity group (:==L operator share) can be assigned as owner of operated ventures that are wholly owned by the company. "his might occur when a new venture is set up before prospective partners sign the agreement. )n this case# a corporate e/uity group could be assigned to ownership of the venture until the partners sign. Ihen the partners sign the agreement# a new e/uity group# reflecting the new group of owners# would be assigned to ownership of the venture. )f you are setting up e/uity groups in the )nternational 6egion# refer to Creating a Joint Venture# and read the )nternational 6egion section for details on how to specify the funding currency and the substitute cost center at the e/uity group level.

).).1 ,reating Equit "roups

Prerequisites
0ou must create a joint operating agreement (&*A) and joint venture accounting (&'A) partners before you create e/uity groups. (ee a&so7

Creating a &oint *perating Agreement (&*A) ,usiness %artners

"o access the screen on which you can create e/uity groups for the &*A from any other &*A screen# choose the function E%uity grou s. "he Joint ! erating Agreement: E%uity (rou s screen will be displayed. *n this screen# you can define either the operator share in the ! erShare field or the non-operating share in the )on! Share field. *enu Pat1 1. *n the SAP Easy Access menu# choose Master data Joint o erating agmt Maintenance# 2. *n the Joint ! erating Agreement: "nitial screen# choose Change# "he Joint ! erating Agreement: Change screen appears.

Procedure
1. -nter a code for the &*A in the Joint ! er#Agr field on the Joint ! erating Agreement: 2. 3. 4. 5.
Change screen. -nter the Com any code. Choose the function E%uity grou s to access the Change Joint ! erating Agreement: E%uity (rou s screen. -nter an e/uity group code in the E( field. -nter a percent ownership in the applicable fields (! erShare field or )on! Share field) or leave the field blank.

>. ?. A. <.

10. 11.

6efer to the definitions and table in the -/uity Broups section for additional information. -nter a .escription. Choose -1"-6. A venture type is assigned. )f the venture type assigned is non-operated# choose $A'- to complete setting up an e/uity group. %roceed to step eleven# if the following venture type assigned is3 operated on-billing Ese the menu path Details Partner shares to access the Change Joint ! erating Agreement: Partner Shares screen. -nter a partner code in the Partner field. )f you have created an e/uity group by copying from another e/uity group# and you want to remove the unsuspense flag from the %artner data# clear the +, Per and -ear fields associated with the unsuspense status. Choose -1"-6. (lag the S (suspense) field. Choose -1"-6. 0ou can now override or remove the defaulted period and year in the Per and -ear fields that are associated with the suspense status. -nter the percent ownership of the joint venture in the E%Share field. "he sum of the operating share added to all non-operating shares must e/ual :==L.

12.

(lag the Sto Pay field . when revenue for a partner should not be included in the accounts receivable netting process. "o remove a partner from the Sto Pay status# leave the field blank. :8. Choose -1"-6. 14. Ese the menu path (oto $ac/ to return to the Change Joint ! erating Agreement: E%uity (rou s screen. :;. Choose $A'-. A system message confirms that the e/uity group has been set up.

).).) ,1anging an Equit "roup

Prerequisites
*enu Pat1 1. *n the SAP Easy Access menu# choose Master data Joint o erating agmt Maintenance. 2. *n the Joint ! erating Agreement: "nitial screen# choose Change# "he Joint ! erating Agreement: Change screen is displayed

Procedure
:. -nter the joint operating agreement (&*A) code in the Joint ! er#Agr field on the Joint ! erating Agreement: Change screen. 7. Choose the E%uity grou s function. 8. -nter your changes. 9. Choose $A'-. A system message confirms your changes to the &*A.

).).2 Disp&a ing an Equit "roup

Prerequisites
*enu Pat1

Maintenance. 2. *n the Joint ! erating Agreement: "nitial screen# choose Dis lay# "he Joint ! erating Agreement: Dis lay screen appears.

1. *n the SAP Easy Access menu# choose Master data Joint o erating agmt

Procedure
1. -nter the joint operating agreement (&*A) code in the Joint ! er#Agr field on the Joint
! erating Agreement: Dis lay screen.

2. Choose the function E%uity grou s.

).2 Joint Ventures

Definition
A joint venture is an arrangement# based on the provisions of a joint operating agreement (&*A)# in which two or more parties agree to work together for a common purpose. &oint ventures are common when development or operational activities are capital intensive# involve high risk# and possibly long payback periods. "he joint venture allows participants to spread the risk by sharing in operational costs. "he joint venture partners share revenues in proportion to their investments. "he partners also ensure operational efficiency# by contributing their e!pertise.

'se
"he $A% joint venture business object is used to identify the type of venture# such as corporate# operated# or nonoperated# as well as the partners and their working interests within the &*A. An e/uity group defines the joint venture partners and their interests. An e/uity type gives reason to the e/uity group.

(tructure
+ost e!pense data for joint ventures is captured in other $A% components and processed in $A% &oint 'enture Accounting (&'A). Ihen e!penses are captured# they are assigned to a cost object associated with a venture. $A% &'A re-assigns# these joint venture e!penses to the joint venture operating partner and the non-operating partners# according to their e/uity shares in the venture. "he following diagram illustrates how costs flow through $A% &'A.

"here are five types of joint ventures or 'enture types. -ach type is used to identify a different form of ownership. "he venture types are described in the following table3 Operated (no ta4) *perated by the company managing $A% &'A Allows carried interest (C)) or net profit interest (1%))# partner# and suspense processing 0ou can not add a ta! to this type of venture Operated (3it1 ta4) *perated by the company running $A% &'A 1either C)J1%) partner nor suspense processing is allowed for this type of venture 0ou can assign a ta! code Cutback calculates ta! charges to venture partners# based on the ta! setting for the company in the $A% &'A configuration 5on6operated $enture Company managing $A% &'A holds a non-operated venture share "his is billed by the operator for its share of venture e!penses 5on6operated on6bi&&ing Company running $A% &'A sells part of its non-operated share of the venture to third parties. Company running $A% &'A distributes portions of the billings it receives from the venture operator to the partners in its non-operating share# in effect acting as an operator toward these third party partners ,orporate $enture Company running $A% &'A holds a :==L interest *nly one default corporate venture and e/uity group e!ists in a &'A company

-!penses booked in the $A% &'A company without $A% &'A information# such as venture and e/uity group# are assigned to the corporate venture and e/uity group by default 0our system administrator sets this up in configuration

).2.1 ,reating a Joint Venture

Prerequisites
,efore you can create a joint venture# you must set up the following prere/uisites3 &oint operating agreement (&*A) &oint venture number range 'enture class -/uity groups %osting method 0our system administrator sets up the joint venture number range# venture class# and posting method during configuration. (ee a&so7

Creating a &oint *perating Agreement (&*A) Creating -/uity Broups

*enu Pat1 1. *n the SAP Easy Access menu# choose Joint venture accounting Master data Joint venture Maintenance# 2. *n the Joint 0enture Master: "nitial screen# choose Create. "he Joint 0enture Master Create screen appears.

Procedure
:. -nter a code for the new venture in the Joint 0enture field on the Joint 0enture Master: Create screen. "he range of possible joint venture codes has been set up in the configuration of your system. &oint venture codes are either automatically assigned by the system (Internal Code) or assigned by you (External Code). 7. -nter the Com any code. 8. -nter a code in the 0enture class field. A joint venture number range is assigned to a 0enture class# "his assignment determines whether the joint venture code is generated internally or e!ternally. 9. -nter a code for the &*A to which the venture will be assigned in the Joint ! er# Agr field. ;. Choose the 'enture type that fits the ownership of the &' you are setting up. (or further information# refer to the 0enture ty e table in the &oint 'entures *nly if you are using another joint venture as a model# enter the reference &' code in the Reference Joint 0enture field. >. Choose -1"-6. "he Create Joint 0enture Master:$asic Screen is displayed. ?. -nter a brief description of the joint venture. A. -nter a code in the Posting method field. "he Posting method field determines whether the venture will be subject to cash calls. <. Choose $A'- now or continue to complete the optional fields that are appropriate for your company and then save. A systems message confirms that a joint venture has been created.

*ptional fields on the Create &oint 'enture +aster3 ,asic screen3 vary according to the region. A&& #egions "he 0enture active field is set by default. )f the field is set, the venture e!penses are included in cutback and billing. Internationa& #egion )n the 'a1 code field# you enter the code for the ta! category containing the ta! rate and cost calculation rules to be applied to venture e!penses. "he $illing Format field code determines the layout of invoices and billing statements for the venture. )f you perform billing at the venture level# as determined by the company global parameters# you must define the billing format for each venture. )n the $illfr% field8 you enter the code for the fre/uency at which billing is e!ecuted. )n the C/# F# Cur# field# you enter an indicator if a check is to be performed# to ensure that all concurrently active e/uity groups in the venture have the same funding currency.

).2.) ,1anging a Joint Venture

Prerequisites
1. *n the SAP Easy Access menu# choose Joint venture accounting Master data Joint 2. *n the Joint 0enture Master: "nitial screen# choose Change.
"he Joint 0enture Master Change screen appears. venture Maintenance#

Procedure
:. -nter codes in both the Joint 0enture and Com any code fields on the Joint 0enture Master: Change screen. 7. Choose from the following functions3 $asic screen E%uity grou s E%uity 'y es 8. -nter your changes. 9. $A'-. A system message confirms that the joint venture has been changed.

*n the Create &oint 'enture +aster3 -/uity Broup screen# you can access the following optional fields by choosing the (und Cur. by -. Brp. and the $ub. Cost *bj. function keys3 -unding ,urrenc )n the Funding Currency field# you enter the code for the funding currency for each e/uity group. (ubstitute ,ost Object )n the Substitute cost ob2ect fields# R", Cost center, Pro2ect34$S, and !rder number# you enter the code for the cost object to which the results of venture bank account (',A) switching will be posted.

Parent ,ompan O$er1ead (P,O) )n the Parent com any overhead fields# R", Cost center, Pro2ect34$S, and !rder number, you enter the code of the parent company overhead for which each e/uity group should be booked. )f this field is blank# overheads are booked to the cost objects to which the original e!penditures were booked. "his only applies to the international region. (ee a&so7

.efault ,illing Currency

).2.2 Disp&a ing a Joint Venture

Prerequisites
1. *n the SAP Easy Access menu# choose Joint venture accounting Master data Joint 2.
venture Maintenance. *n the Joint 0enture Master: "nitial screen# choose Dis lay.

"he Joint 0enture Master: Dis lay screen appears.

Procedure
1. -nter codes in both the joint venture and Company code fields on the &oint 'enture
+aster3 .isplay screen. 7. Choose from the following functions3 ,asic screen -/uity groups -/uity "ypes

).9. Equit "roup and Equit ! pe Assignment

Definition
"he following topics describe how to assign e/uity groups and e/uity types3 -/uity Broups -/uity "ypes Assigning -/uity Broups to &oint 'entures

).9.1. Equit "roup Assignment

'se
After you set up a joint venture within a joint operating agreement (&*A)# you must specify the owners of the venture. 0ou establish ownership by assigning an e/uity group within the &*A to the venture. "his allows you to apportion all e!penses booked to the venture to the partners in this e/uity group# based on their e/uity share.

).9.). Equit ! pe Assignment

'se
-/uity types e!plain the reason for a particular group of partners# represented by an e/uity group# within the venture during any billing period. Ihile the joint operating agreement (&*A) defines all possible partners and their working interests# all partners do not need to participate in all ventures at all times. "herefore# the e/uity type is used to identify the active association of partners and their interests within a venture. "he reasons for this active status may result from elements of time# phase# or purpose according to operational re/uirements. 0ou define e/uity types initially at the company code level and they are available for all &*As and their ventures. -/uity types adopt a specific identity when they are associated with an e/uity group within a venture.

-eatures
Equit ! pe and Equit "roup #e&ations1ips

).9.2. Assigning Equit "roups to Joint Ventures Prerequisites

Certain types of e/uity groups correspond to specific venture types. Ihen you access the Change Joint 0enture Master: E%uity 'y es Assignm# screen# all the e/uity groups set up for the joint operating agreement (&*A)# that correspond to the venture type# are displayed. Correspondence between e/uity groups and venture types depends on the entries made in the ! erShare and the )on! erShare fields. "hese entries are made when you set up the e/uity group. (ee a&so7

-/uity Broups
,efore you can assign an e/uity group to a joint venture# you must ensure that an e/uity type has been set up. *enu Pat1 1. *n the SAP Easy Access menu# choose Joint venture accounting Master data Joint venture Maintenance# 2. *n the Joint 0enture Master: "nitial screen# choose Change. "he Joint 0enture Master: Change screen appears.

Procedure
:. -nter the joint venture code in the Joint 0enture field on the Joint 0enture Master: Change screen. 7. -nter the Com any code. 8. Choose the function E%uity ty es to access the Change Joint 0enture Master:E%uity 'y es screen. All the e/uity types for the company are listed on this screen. 9. Choose E%uity 'y e field to select the ty e that you want to assign to an e/uity group. "his will display the Change Joint 0enture Master: E%uity (rou Assignm# screen where you can assign an e/uity group to the venture.

'alid from and -BAct (ields 0ou can post e!pense entries only to ventures with active e/uity groups. An indicator must appear in the -BAct field for an e/uity group. Ihen you make an e/uity group active# you must also indicate a date in the 'alid from field. $A% &'A posts e!pense entries to the venture by using the latest active e/uity group based on the system date (the date when the posting was entered). )f there is no active e/uity group# a system error message informs you that no active e/uity group e!ists for the venture. 0ou may specify a 'alid from date for an e/uity group without making it active. )f the active e/uity group for the venture has a 'alid from date that precedes the 'alid from date of another e/uity group for the venture that is inactive# the system will post the entry to the venture# by using the active e/uity group. A system message warns you that it used the latest active e/uity group# although another inactive e/uity group for the venture with a later date e!ists. ;. -nter the validity date for the e/uity group within the venture in the 0alid from and E(Act fields to connect an e/uity group to an e/uity type in the venture. >. Choose -1"-6. An 1 appears by default in the E(Act field indicator bo! to indicate that the e/uity group is active as of the date specified in the previous step. ?. Ese the menu path (o $ac/# A. Choose $A'-. A system message confirms the changes to the specified joint venture.