221545843 jva workshop unit 1
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SAP AG 2002
Joint Venture Accounting (JVA)
Joint Venture Accounting (JVA)
SAP AG 2002
JVA Workshop
Day 1 Basics1. Introduction2. Accounting Principles3. Master Data4. Integration
Day 2 Day-to-Day Processes1. Data Entry2. Payments3. Operated Accounting4. Non-Operated Accounting
Day 3 Periodic Processes1. Cutback2. Foreign Currency Valuation3. Month End Processing
Day 4 (half day) Reporting1. Billing2. Reporting3. Planning4. Year End
Day 4 (sec half) Configuration1. Customizing #1
Day 5 (first half) Configuration1. Customizing #2
SAP AG 2002
JVA Workshop Goal
Understand the concepts and gain hands-on experience of mySAP.com Oil & Gas JVA
Perform JVA related functions, using Finance, Controlling, Project System, and Materials Management
Use sample companies to understand and apply JVA functions
This workshop will enable you to:
SAP AG 2002
JVA Unit 1
Basics
1. Introduction
2. Accounting Principles
3. Master Data
4. Integration
SAP AG 2002
JVA 1.1
Introduction
This section introduces the concept of JVA.
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What are the Oil and Gas Industry processes?
EXPLORE DEVELOP PRODUCE REFINE MARKET SELL
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Why Are Joint Ventures Used?
The Upstream Oil and Gas Industry Is characterised by:
• High Risk• Large Investment• Long Term Commitment
To share the risk Companies form Joint Ventures
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Who Runs a Joint Venture?
Non OperatorPartner A
Non Operator Partner B
Manage the work
Plan and run venture activities
Maintain accounting records for venture
Report venture activity to partners
Share income or product
Operator
JV#1 Exploration
JV#2 Construction
JV#3 Production
35%
65%
30%
30%40%
70% 30%
Joint Ventures
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SAP JVA
Non-Operating Partner
Maintain accounting records for their own share of the venture
Settle accounts with the operating partner, according to the conditions of the venture
Operating Partner
• Manage the venture on a day-to-day basis
• Maintain venture accounting records• Calculate partner shares of venture
expenditure and revenue• Report venture activity to partners
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JVA 1.2
Accounting Principles
This section describes the accounting principles behind SAP JVA.
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T Accounts
Partner Account
1 150
50 2
100
Notes
1. Partner share of venture costs
2. Settle partner account
Account name
Debit Entry Credit Entry
Final Balance of Account
Asset account Liability account Capital account
Increase Increase IncreaseDecrease Decrease Decrease
JV Costs
150 1
150
JV Bank
2 50
50
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Company BCompany A
Operator Oriented Accounting
Notes
1. Company A incurs costs running the venture.
2. Company A calculates company B’s share of costs (40%).
3. Company B accounts for its own share of costs.
4. Company B reimburses company A.
Partner B
2 40
40 4
Venture Bank
100 1
4 40
60
Venture Costs
1 100
40 2
60
Venture Account
40 3
4 40
Own Bank
40 4
Venture Costs
3 40
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Partner Oriented Accounting
Operating Co. Company A
VentureNotes
1. Company A incurs costs while running the venture.
2. Company A calculates the share of costs for Partner A and Partner B.
3. Company A accounts for its own share of costs.
4. Company B accounts for its own share of costs.
5. Company A reimburses the venture.
6. Company B reimburses the venture.
Partner A 60%
2 60
60 5
Venture Bank
100 1
5 60
6 40
Venture Costs
1 100
60 2
40 2
Venture Account
60 3
5 60
Own Bank
60 5
60
Venture Costs
3 60
60
Company B
Venture Account
40 4
6 40
Own Bank
40 6
40
Venture Costs
4 40
40
Partner B 40%
2 40
40 6
SAP AG 2002
Company A
Operator / Partner Accounting
CompanyVentureNotes
1. Company A incurs costs running the venture.
2. Company A calculates the share of costs for Partner A and Partner B.
3. Company A accounts for its own share of costs.
4. Company B accounts for its own share of costs.
5. Company A reimburses the venture.
6. Company B reimburses the venture.
Partner A 60%
2 60
60 5
Venture Bank
100 1
5 60
6 40
Venture Costs
1 100
60 2
40 2
Venture Account
60 3
5 60
Own Bank
60 5
60
Venture Costs
3 60
60
Company B
Venture Account
40 4
6 40
Own Bank
40 6
40
Venture Costs
4 40
40
Partner B 40%
2 40
40 6
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Billing Basis
Expenditure Based
Invoice Based
Cash Based
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Venture
Billing Basis: Expenditure Based
Expenditure
1 100
100
Vendor
100 2
3 100
Venture Bank
100 3
100
GRNI Accruals
100 1
2 100
Bil
lab
leN
on
-Bil
lab
le
Notes
1. Expenditure is incurred in Month 1.
2. An invoice is received in Month 2.
3. An invoice is paid in Month 3.
JV Billing Month 1
Expenditure 100
Total 100
JV Billing Month 2
Expenditure 0
Total 0
JV Billing Month 3
Expenditure 0
Total 0
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Billing Basis: Invoice Based
Venture
Expenditure
1 100
100
Vendor
100 2
3 100
Venture Bank
100 3
100
GRNI Accruals
100 1
2 100
Bil
lab
leN
on
-Bil
lab
le
Notes
1. Expenditure is incurred in Month 1.
2. An invoice is received in Month 2.
3. An invoice is paid in Month 3.
JV Billing Month 1
Expenditure 100
GRNI Accruals -100
Total 0
JV Billing Month 2
Expenditure 100
GRNI Accruals 0
Total 100
JV Billing Month 3
Expenditure 0
GRNI Accruals 0
Total 0
SAP AG 2002
Billing Basis: Cash Based
Venture
Expenditure
1 100
100
Vendor
100 2
3 100
Venture Bank
100 3
100
GRNI Accruals
100 1
2 100
Bil
lab
leN
on
-Bil
lab
le
Notes
1. Expenditure incurred in Month 1.
2. Invoice received in Month 2.
3. Invoice paid in Month 3.
JV Billing Month 1
Expenditure 100
GRNI Accruals -100
Vendor 0
Total 0
JV Billing Month 2
Expenditure 100
GRNI Accruals 0
Vendor -100
Total 0
JV Billing Month 3
Expenditure 100
GRNI Accruals 0
Vendor 0
Total 100
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JVA 1.3
Master Data
This section describes the master data used in JVA.
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Joint Operating Agreement (JOA)
Formal contractual agreement
• Specifies conditions for joint activities• Defines partner shares (working interests)• Describes rules for sharing profit and loss• Specifies penalties
JOA
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Joint Venture
Joint Venture
Definition of joint activities
• Defines role of own company in venture• Assigns partner shares and validity• Specifies reporting requirements• Defines taxation rules• Defines accounting procedure
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Equity Group
Definition of partner shares and roles
• Single operating partner and share• One or more non-operating partners and shares
Equity Group
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Joint Venture Partner
Definition of entity participating in a joint venture
• Can participate in one or more ventures simultaneously
• Linked to customer accounts receivable (A/R) sub-account for non-operating roles
• Linked to vendor accounts payable (A/P) sub-account for operating roles
Partner
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Joint Venture Partner: A/R and A/P
• Customer record required for all partners
• Vendor record required for all partners
• Link customer and vendor using Account control fields
JV PartnerCustomer
Vendor
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SAP Company GBU1
Customers
Inter-Company Partners
Partner Inter-Co Code Partner Name
JV5001 Caledonian Oil
JV5101 Troll Oil
JVGBU2 GBU2 SAP Company GBU2
JV5001
JV5101
JVGBU2SAP Company GBU2
Customers
Partner Inter-Co Code Partner Name
JVGBU1 GBU1 SAP Company GBU1
JVGBU1
Vendors
JVGBU1
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Partner 2
Partner 1
Master Data Structure
Venture 1
Operator
Venture 2
Equity Group A
Venture 3
Equity Group E
Partner 2
Partner 1
Operator
Partner 3
Equity Group B Equity Group C
Equity Group D
Equity Group A
JOA
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Equity Group E
Equity Group D
Equity Group C
Equity Group B
JOA Assignments
JOA
Venture 1Equity Group A
Venture 2
Venture 3
DATE
DATE
DATE
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Equity Type
Definition of activity in a joint venture
• Represents time-independent aspect of venture and equity group
• Provides link between venture activity and equity group
• Activity may be actual or logical
Equity Type
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Assignment of Equity Group to Equity Type
March April May
Equity Group A Equity Group C
Equity Group A
Equity Group A Equity Group D
Equity Type 1
Equity Type 2
Equity Type 3
Venture 2
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Partner 1
Equity Group B
Assignment of Equity Group to Partners
Venture 1
Operator
Equity Group A
Partner 2
Partner 1
Operator
60%
40%
40%
40%
20%
Company A
Customer A
Customer B
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Cost Object
Data Model
JOA Joint Venture
Equity Group Equity Type
Partner Equity Share
Recovery Indicator
G/L Account
Date
Plant
Valuation Type
Partner
Customer Account
Vendor Account
Company Code
Cost centre
WBS Element
Order
Network
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Exercise 1.1: Review Joint Venture Master Data
1. Display joint venture partners2. Display a JOA3. Display a joint venture
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Corporate JOAs
Non-Operated JOAs
Operated JOAs
JOA Class
Company Code
Joint Oper. Agreement
JOA Class01 Operated02 Non-OperatedCP Corporate
JOA Class
JOA 3JOA 4
JOA 2
JOA 5
JOA 7JOA 6 JOA 9
JOA 8JOA 1
JOA Class is used to group JOAs
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Maintain a JOA
You can assign an alternative address to each area.
The applicable venture type is determined automatically.
You cannot change the equity group if JVA documents exist.
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Corporate Ventures
Non-Operated Ventures
Operated Ventures
Joint Venture Class
Company Code
Joint Venture
JV Class01 Operated02 Non-OperatedCP Corporate
JV Class
JV 3JV 4
JV 2
JV 5
JV 7JV 6 JV 9
JV 8
JV 1
JV Class is used to group joint ventures
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Venture Type
• Operated not taxed
• Operated taxed
• Non-operated, on-billed
• Non-operated
• Corporate
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Maintain Joint Venture
The Posting Method is used to determine the accounting treatment of a venture.
The Funding Group represents a group of ventures that are funded from the same set of bank accounts.
The assignment from equity type to equity group is based on the document date.
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Recovery Indicator
Recovery
Indicator
Identifies category of a joint venture transaction
• Indicates whether a particular revenue or expense is shared by venture partners
• Used to select data for reporting to venture partners
• Used to distinguish between joint and own revenues and expenditures
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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)
CUTBACK30%
CUTBACK30%
Venture (Gross) Reporting
Venture (Gross) Reporting
Own (Net) Reporting
Own (Net) Reporting
Gross Exp.
Net Exp.
Billable Balances
Cutback posting
100
20
10
33-
100
20
10
33-
ExpenditureJV Billing
11033
130
97
SAP AG 2002
Exercise 1.2: Create Joint Venture Master Data
1. Add a new partner2. Create a JOA3. Create a joint venture
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JVA 1.4
Integration
This section describes the integration between JVA and other SAP R/3 components.
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What is the JVA Module?
CompanyCode
VentureEquityGroup
AccountCost
ObjectProfitCenter
RecoveryIndicator
CodingBlock
Set of Special Ledgers comprising Line Item and Balance tables fed almost entirely from standard Set of Special Ledgers comprising Line Item and Balance tables fed almost entirely from standard SAP modulesSAP modules
JVA Coding blockJVA Coding block is based on Joint Venture structures but also contains the key structures from the is based on Joint Venture structures but also contains the key structures from the standard financial and costing modules.standard financial and costing modules.
JVA captures JVA captures ALLALL financial and cost postings real time from standard modules such as FI, CO & MM financial and cost postings real time from standard modules such as FI, CO & MM and converts them to JV formatand converts them to JV format
It provides new processes specific to E & P and also amends standard ones to be compatible with the It provides new processes specific to E & P and also amends standard ones to be compatible with the JV structuresJV structures
It provides a full Trial Balance by Venture and Equity Group It provides a full Trial Balance by Venture and Equity Group
Effectively a new Finance Reporting ModuleEffectively a new Finance Reporting Module
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Integration
Accounting Interface
AMMM
FI
PS
CO
SD
HR
PM
JV Interface
CodingSplittingClearing
Accounting Document
JVDocument JV
Database
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Reporting with JVA
FI CO
JVA
PMMM PSAM
Financial ledgerAccount
Costing LedgerAccount + Cost Object
PSA
FINANCIAL DOCUMENT
BILLING
JV ledgerAcct + C/O + Venture
JV Processes
JV Billing ledger
PSA Reporting ledgerPSA
Open Item MgtAP, AR etc
Bank & Cash
Cost AllocationsManagement
ReportingBudgets & Plans
Finance ReportsCost Reports
Budgets & Plans
Partner BillingCash Statements
Invoices
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JVA Data Capture
FI Balance SheetFI Balance Sheet
FI Cost and IncomeFI Cost and Income
CO Cost allocationsCO Cost allocations
FIFI COCO
PSPSJVJV
CapturedCaptured
PCAPCA
Not Captured
Partly Captured
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JVA Activation
The JVA module is activated at The JVA module is activated at Company LevelCompany Level in SAP - specify: in SAP - specify:
Region - Region -
USAUSA
CanadaCanada
InternationalInternational
Billing Basis – Billing Basis –
CashCash
Expenditure Expenditure
InvoiceInvoice
Banking arrangements – Venture Bank Accounts and SwitchingBanking arrangements – Venture Bank Accounts and Switching
JVA Cutback Model -JVA Cutback Model -
Standard Standard
Operator as Partner modelOperator as Partner model
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Cost ObjectCost Object
Joint Venture Coding for Cost Object
Production Order
Network Order
Plant Maintenance
Order
Project Cost centre Internal Order
Joint Venture
Equity Type
Recovery Indicator
JV Object Type
JIB/JIBE Class
JIB/JIBE Subclass A
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Joint Venture Coding Fields
Joint Venture
Equity Type
Recovery Indicator
JV Object Type
JIB/JIBE Class
JIB/JIBE Subclass A
Joint Venture
Equity Type
Recovery Indicator
JIB/JIBE Class
JIB/JIBE Subclass A
JV Object Type
Accounting
Control
Reporting
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Accounting Documents
Vendor Invoice
FI Document
CO Document
JV Document
JV Document
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Joint Venture Coding for Assets
Fixed Asset Owning Cost centre
Joint Venture
Equity Type
Recovery Indicator
JV Object Type
JIB/JIBE Class
JIB/JIBE Subclass A
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Joint Venture Asset Posting
Accounting options for capitalisation:
1) Via a WBS or Order :
2) Direct to the Asset Accounts :
Accounts Payable WBS Assets
100 100
30
70 70
Accounts Receivable
30
Invoice
Cutback
Settlement
Accounts Payable Assets
100 100
30
Accounts Receivable
30
Invoice
Cutback
70
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Joint Venture Asset Posting
JV Document
Vendor Invoice
Asset Document
JV Document
Asset Master
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Plant
Joint Venture Coding for Material
Valuation Type
Project
Cost centre
Internal Order
Joint Venture
Equity Type
Recovery Indicator
JV Object Type
JIB/JIBE Class
JIB/JIBE Subclass A
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Joint Venture Material Posting
JV Document
Goods Receipt
Material Document
Accounting Doc JV Document
MM Assignments
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Default Joint Venture Coding for PM Orders
Project
Cost centre
Joint Venture
Equity Type
Recovery Indicator
JV Object Type
JIB/JIBE Class
JIB/JIBE Subclass A
Plant Maintenance
Order
Functional Location
Equipment
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Exercise 1.3: Create Integrated Master Data
1. Create a joint venture cost centre2. Create a joint venture project
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Unit 1 Summary
Understand the concepts and gain hands-on experience of mySAP.com Oil & Gas JVA
Perform JVA related functions, using Finance, Controlling, Project System, and Materials Management
Use sample companies to understand and apply JVA functions
You are now able to:
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