Introduction to Joint Venture Accounting (JVA)
Definition
SAP designed JVA for joint venture operations. SAP JVA captures all expenditures and other joint venture transactions by using functions from Financial Accounting (SAP FI), Controlling (SAP CO), Asset Management (SAP AM), Materials Management (SAP MM), Plant Maintenance (SAP PM), and Project System (SAP PS). By working closely with customers and implementation partners, SAP ensures that JVA facilitates smooth management of joint ventures, with great flexibility for growth.
https://help.sap.com/viewer/f049a59301a94f1c9bb60ca8394db217/1909.001/en-US/6066d0531d8b4208e10000000a174cb4.html
The primary SAP JVA objects are described in the following table.
|
Object name |
Description |
|
Joint Operating Agreement (JOA) |
A JOA is a formal agreement that specifies the conditions for a joint operation. This covers the working interests of the partners and their properties, as well as overheads and penalties. |
|
Joint Venture |
This is an association of two or more partners, formed to share a venture’s risks, costs, and revenues. Each partner’s share is proportional to their working interest in the venture. |
|
Equity Type |
The JOA has different development stages, such as engineering and design, construction, and production. Different partners participate at each stage. JVA manages the different stages by using equity types. An equity type explains a particular association of partners. This definition may be related to time, phase or purpose and is linked with a specific equity group. |
|
Equity Group |
An equity group represents an association of venture partners and their working interests. An equity group may consist of all or some of the venture partners. |
|
Joint Venture Partner |
This is a partner mentioned in the JOA with a working interest in a venture. One partner, called the operator, manages the operation. The remaining non-operating partners share expenses and revenues. |
|
Recovery and Billing Indicators |
You assign a recovery indicator to a cost object to indicate whether or not expenses, posted using the cost object, are billable to JVA partners. You assign billable costs to the appropriate partners. Non-billable expenses are assigned to the operator. Billing indicators are assigned to billable postings and identify the type of posting involved, including cash call, normal expenditure, and audit adjustment to a particular partner account. |
Use
The JOA specifies the relationship between partners, joint ventures, and rules for cost calculations. Joint ventures, equity types, and equity groups are assigned to a JOA. Joint venture partners are assigned to equity groups. A joint venture can belong to only one JOA. However, multiple ventures can belong to the same JOA. You can assign multiple equity groups to one JOA, and you can assign the same equity group to multiple joint ventures.
Structure
The following diagram shows the relationship between SAP JVA objects.
SAP JVA Business Object Structure
Common SAP JVA activities include setting up and maintaining JVA objects.
