IOGW40

Joint Venture Accounting

THE BEST-RUN BUSINESSES RUN SAP

© SAP AG 2007

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 JVA Workshop IOGW40

Unit 1 Basics
1.1 Introduction & Accounting Principles
1.2 Master Data
1.3 Integration

Unit 2 Day-to-Day Processes

2.1 Data Entry
2.2 Operated Accounting

Unit 3 Periodic Processes

3.1 Cutback
3.2 Month End Processing
3.3 Joint Venture Billing

Unit 4 Joint Venture Configuration (in IMG)

4.1 Company Code Configuration
4.2 Master Data Configuration
4.3 Processing Configuration
4.4 JV Billing Configuration

© SAP AG 2007

„ This online learning course consists of four units. Each unit is divided into several separate
lessons so you can work with one lesson for a longer time if necessary. However, we
recommend that you complete each unit in the defined sequence in order to understand the
solution better.
„ After you have completed the e-books in all four units, you should have a good
understanding of joint venture accounting concepts, be able to set up and manage basic joint
venture contracts using the SAP JVA solution, and have good knowledge of the breadth and
capabilities of the SAP JVA functions.

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 Unit 4.3 Objectives

At the end of the third lesson of unit 4, you will be able

to:
z Describe how to configure JVA processes

© SAP AG 2007

At the end of the third lesson of unit 4, you will be able to describe how to configure JVA
processes.

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Jva 4.3

This section describes how to

configure JVA processes.

Process Configuration

© SAP AG 2007

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JVA Processes

JVA Processes

JVA Process

Cash Calling

Cutback
ITEM TYPE
ITEM
ITEM TYPE
Non-Op Billing ItemTYPE
Type
Bank Switching

Equity Adjustment

© SAP AG 2007

„ JVA processes are programs or collections of programs in SAP JVA.

„ Each process is assigned one or more item types, which represent the different types of
accounting transactions posted by the process.
„ You can add your own processes, but you may not change any of the processes that are
supplied.
‹ Select PostM, the joint venture posting method indicator, if you want a posting method to be
used to obtain the posting rules.
‹ Select RecId, the recovery indicator, if you want a JVA function to have a recovery indicator for
a key when defining the posting method rules details.
‹ Select FI Post if you want the process to post documents to SAP FI.
‹ Select GLX Post if you want the process to post document directly to the JVA database.

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Posting Rules

JVA Processes

JVA Process Posting Method

ITEM TYPE ITEM TYPE

ITEM
ITEMTYPE
TYPE ITEM
ITEMTYPE
TYPE
Item Type Posting Rule
JVA Posting Methods

JVA Posting Rule Details

JVA Posting Rules

JVA Posting Rule Detail

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„ JVA posting rules are defined for a joint venture process and for a posting method.
„ Each posting rule specifies posting parameters for a particular item type including the
following:
‹ Posting key
‹ Special entry indicator
‹ Billing indicator
‹ Payment block
‹ Recovery indicator
„ The posting method is assigned to a joint venture. It allows different ventures to use different
sets of posting rules. You can use different posting methods, for example, to provide different
posting rules for cash called and invoiced ventures.
„ Some JVA processes have rules assigned independently of the posting method. In this case,
the rules such as those for bank switching apply to the whole company code.

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Recovery Indicator Manipulation

Manipulation Rules

Recovery Indicator Relations

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„ To define allocations for your company in SAP JVA, you must first define the rules that
control how recovery indicators are assigned to the records of sending and receiving cost
objects during allocations. After you define the recovery indicator manipulation rules for
allocations, you can assign these rules to the various allocations as you set them up.
Remember that allocations can be assessments, distributions, and settlements. The rule you
assign to a particular allocation determines the recovery indicators for the postings that result
from execution of the allocation.
„ You define a manipulation rule for recovery indicators that are to be used in allocations as
follows:
‹ First, you create the manipulation rule and assign global parameters to it.
‹ Next, you assign specific manipulation rules for individual recovery indicators.
‹ In the Manipulation Rules table shown on the screen:
‹ The MRul field displays the code for the new manipulation rule.
‹ The Manipulation Rule Description field displays a description of the new manipulation rule.
‹ The Message type field displays the type of message to be issued if the rule cannot be applied
properly during an allocation. An error message will preclude posting results of the allocation.
‹ The MDerivation field displays the method of deriving the recovery indicator that should be
assigned to postings resulting from execution of the allocation.

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Allocation Cycles

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An allocation can be an assessment or a distribution. You define an allocation cycle as follows:

„ Create the cycle.
„ Enter information about the cycle.
„ Create the segment.
„ Assign the secondary cost element to the segment.
„ Assign senders and receivers to the segment.
„ Define receiver tracing factors for the segment.

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Settlement Rules

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„ To assign settlement rules to WBS elements and orders, you should first create settlement
objects in JVA configuration: origin structures, settlement structures, and settlement profiles.
„ You do not need to create these objects in a specific order. However, because the origin and
settlement structures are assigned to the settlement profile, it is logical to create these
structures before creating the settlement profile.
„ The origin structure defines the sending cost elements to which the costs to be settled were
originally posted. You define an origin structure as follows:
„ Define layouts for the origin structure
„ Assign multiple assignments to each layout
„ Assign the range of sending cost elements whose postings will be settled to each
assignment
„ The settlement structure defines the secondary cost element used to post the results of the
settlement to the receiving objects. You define a settlement structure as follows:
„ Create the settlement structure.
„ Define the multiple structure assignments of the structure.
„ Specify the receiving cost element for each structure assignment.

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„ When you have set up the origin and the settlement structures, you can define the settlement
profile and assign these structures to it.
„ The settlement profile includes the following information:
‹ Settlement structure
‹ Identification of the cost object types of valid receivers
‹ Designation of whether settlement is allowed or required for all receivers for settlements using this
profile
‹ Document type
‹ Maximum number of distribution rules allowed for the profile
‹ Retention period for settlement document

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Automatic Postings

JVA Automatic Postings

Cutback - Tax clearing account JV1

Non-op billing: acct for document split JV2
Misc. Income for Net Profit Interests JV3
Net Expense Account for Net Profit Int. JV4
Misc. Income Holding for Net Profit Int. JV5
Interventure Account JV6
Interest Charged in JV Bank Transfers JV7
GR/IR Shadow Account JV8
Cutback Tax Expense Account JVA
Cutback Tax Suspense Gross JVB

© SAP AG 2007

JVA processes produce automatic postings for the following conditions:

„ Goods receipt before invoice receipt
„ Inter-venture liabilities
„ Tax postings produced by cutback
„ Net profit interest expense and revenue postings
„ Splitting of documents for non-operated billing
„ Foreign currency exchanges
„ The company region largely determines the relevance of these automatic postings.
International region companies deal with foreign currency exchanges, manage ventures by
balanced books, and maintain separate bank accounts for different ventures. As a result,
international region companies generally need to specify accounts for the following processes:
„ JV9 = Foreign currency valuation
„ JV6 = Inter-venture account
„ JV7 = Interest charges in JVA bank transfers
„ GNB = Goods receipt before invoice receipt - delivered but not paid
„ JV8 = Goods receipt before invoice receipt - shadow account

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Companies that maintain tax records in JVA and book tax to partners through cutback should
maintain G/L accounts for the following tax-related cutback processes:
„ JVA = Cutback tax expense account
„ JVB = Cutback tax suspense gross
„ JV1 = Cutback tax clearing account
Companies that record non-operated venture expenses, including billing, in JVA should maintain
accounts for JV2, non-operated billing - account for document splitting.

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Material Condition Codes

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On the Change View “JV Conditional Code”: Overview screen, you specify the codes that
indicate the condition of the material for your company. These codes indicate whether or not the
materials to which they are assigned are serviceable as shown in the example on the screen.

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Valuation Area Assignment

Val.Area Val.Type Cost center Project Order Cond.Code

JA01 A JV01-S01 A
JA01 B1 JV01-S01 B1
JA01 B2 JV01-S01 B2
JA01 C JV01-S01 C
JA01 D JV01-S01 D
JA01 E JV01-S01 E
JA02 JV02-S01
JA03 JV03-S01
JB00 JV1001 JV00-S01
JB00 JV1011 JV01-S01
JB00 JV1021 JV02-S01
JB00 JV1031 JV03-S01

© SAP AG 2007

„ You assign a valuation area, a plant or company code, and an optional valuation type to the
JVA stock cost objects, which are cost center, WBS element, and order. The cost object is
coded onto all MM postings against this valuation area or valuation type, on which the actual
materials are held. You can also define the condition type for the material at the cost object
level.
„ The ValArea field displays the valuation area to be assigned to a JVA-related CO cost object.
Valuation areas are identified with either plant or company code and must be configured in
Logistics, before being used in SAP JVA.
„ The Val.Type field displays the code for the valuation type to be assigned to a JVA-related
CO cost object. Valuation type is optional. Valuation types must be configured in MM before
being assigned to cost objects in JVA.
„ The Cost center field displays the CO cost object that is assigned to valuation area and type.
„ The Cond.Code field displays the condition code for the valuation type. The condition codes
you assign here must be set up as part of JVA configuration for SAP MM.

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PCO: Stepped Rate Rules

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„ Costs that are posted to the cost objects to which the threshold rule applies are accumulated
and compared to the threshold amount for the rule. For stepped rate rules, the initial
threshold functions differ from subsequent thresholds. When actual expenses exceed the
first threshold set for a rule, the rate set for that first threshold is applied to the entire amount
of the actual expenses.
„ For example, if you want to apply 10% overhead to the entire amount when expenses
exceed $25,000, for rule 1 you would enter threshold 25000 and rate 10%. When actual
expenses are $26,000, overhead costs are calculated as 10% of $26,000 or $2,600.
„ For subsequent thresholds, the rate defined for each threshold applies to the amount that
exceeds the current threshold, but falls short of the next threshold if there is one.
„ To apply a rate only to the amount of expenses that exceed a single threshold, you must set
two thresholds, the first with a 0% rate and the second for the threshold that should trigger
the rate to be applied to amounts that exceed the threshold.
„ For example, if you want to apply 10% overhead to the amount of expenses over $25,000,
for rule 1 you would enter threshold 24999 and rate 0%. For rule 2 you would enter threshold
25000 and rate 10%. When actual expenses are $26,000, overhead costs are calculated as
10% of $26,000 - $25,000 or $100.

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PCO: Selection Sets

G/L
G/LAccount
AccountExclusion
Exclusion

G/L Account Set

GL Account

Cost
CostObject
ObjectSelection
Selection

Cost center Set Order Set

Cost center Plant Production
Maintenance Order
Order
Internal
Order

WBS Set
Network Set
Project
Network
Order

© SAP AG 2007

„ Parent company overhead stepped rate rules are applied to cost objects and accounts,
which are selected according to sets. These sets are general purpose objects that are used
for collecting related objects and organizing them in hierarchies. The CO cost center and
cost element hierarchies use these sets. The PCO sets are defined in JVA configuration.
„ The PCO program selects all billable costs for all G/L accounts. You can exclude certain G/L
accounts, such as balance sheet accounts, by using a G/L account set. You can exclude
accounts at different levels: joint venture company, joint operating agreement or JOA, or
single calculation sequence.
„ Accounts and cost objects that are referenced in multiple calculation sequences are included
in the first sequence only.

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Cutback: Account and Cost Object Mapping

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By default, cutback credit is posted to the original account and cost object, but you can specify a
cutback account or cutback cost object to receive the credit instead.

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Unit 4.3 Summary

You are now able to:

z Describe how to configure JVA

processes

© SAP AG 2007

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