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Sap jva training-What is Joint Venture Accounting
- 1. Learn SAP JVA Joint Venture Accounting made easy info@sapsharks.com
- 2. Download this presentation from this link https://sapsharks.com/jv1/
- 6. What is a Joint Venture? Joint Venture Apples Joint Venture Oranges Farmer A Farmer B Shop Joint Venture Carrots
- 12. What comprises an operator? A vendor or a customer becomes a JV partner. The vendor or customer is a prerequisite for a JV partner The partner can be used in an Joint operating agreement after getting created.
- 13. Joint Venture Partner: A/R and A/P • Customer record required for all partners • Vendor record required for operators of non- operated ventures • Link customer and vendor using Account control fields JV Partner Customer Vendor
- 16. Who is a Non operator? In a JV, one partner is the operator who is responsible for the day to day operations. The Non operator is the one who gets billed by the operator and doesn’t take part in the day to day activities of the business. A non operator is created as customer in the system
- 21. Partners Share in the equity group group
- 32. Costs flow from different areas into a joint venture. Different cost objects like Cost center, wbs, internal order etc. have a tab for Joint venture accounting where we enter the JV info
- 33. Plant Joint Venture Integration Valuation Type Project Cost centre Internal Order Joint Venture Equity Type Recovery Indicator JV Object Type JIB/JIBE Class JIB/JIBE Subclass A
- 35. JV OBJECTS The JV information is entered in a cost object Cost Object Create JVs under the JOA Setup the customers and vendors Enter the partners and equity share Operated JOA Operated JVJV Partner accounts Equity group is linked to an equity type Equity group and equity types
- 38. JOA 1 EquityGroup1 VentureA CostCenter100 Drilling AFE EquityGroup2 CostCenter200 EquityGroup3 CompanyCode Understanding JV relationship
- 39. The joint operating agreement is the contract that governs the rights and obligations, including overheads and penalties, of the involved partners and their participating interests in the joint venture. A joint venture is an association of two or more parties jointly undertaking an economic activity under a JOA, with the intention of sharing the associated risks, cost and revenues and this proportional to their undivided interest in for instance, a geographical area for exploration and/or production activities. An equity group defines the association of the business partners, their participation and their contractual interest. Its purpose is to record all activity of a venture for the given equity group. An equity group may consist of one to all of the venture partners. Recovery indicators are recorded on each line item in the JV ledger, determine whether the item is billable to partners in the JV and/or recoverable from the government in a PSA, and the nature of specific postings (e.g. audit and equity adjustments). RI EG JV JOA Key master data concepts you should know
- 42. The recovery indicator is determined based on many factors. Getting this right is one of the most important things in JVA
- 43. Use of Recovery Indicator Material Consumed BI - Billable NB - Non-Billable AD - Adjustments CB - Cutback Material Consumed BI - Billable NB - Non-Billable AD - Adjustments CB - Cutback 1. Basis for sharing partner costs (cutback) 2. Basis for operational reporting (Operator Oriented) CUTBACK JV Billing Venture (Gross) Reporting Own (Net) Reporting Gross Exp. Net Exp.
- 44. Only costs that have billable recovery indicators are billed to the partners
- 53. The program then looks at the equity share to determine how much of the gross costs of $100 is owed by the partners
- 64. E.g. of a bill
- 98. Download this presentation from this link https://sapsharks.com/jv1/
Editor's Notes
- Sometimes, several companies can jointly run a business venture more successfully than an individual company can. The companies can combine efforts for that one venture without merging their businesses. Such projects are known as joint ventures. In the example shown, a shopkeeper and two farmers enter a joint venture. The shopkeeper provides the capital, transportation, and shop space while the farmers provide the produce. The three partners share profits and losses from the joint venture as agreed between them. The companies can run several joint ventures between them, but each venture is separate. The agreements for each joint venture can be different or they can be shared. Each of the companies participating in a joint venture is referred to as a partner. SAP originally designed Joint Venture Accounting (JVA) for the upstream oil industry, and all further examples refer to upstream oil companies. Such companies regularly enter into joint ventures for exploration purposes, to develop oil & gas producing facilities, and to maintain such facilities.
- Material movements are usually coded with a venture. JVA derives venture coding for material movements from a special stock cost object that is assigned to a plant and a valuation type (which is optional) associated with the plant.