What is appropriation of retained earnings in SAP FI-LC - Consolidation?

SAP Term: appropriation of retained earnings

• Component: FI-LC

• Component Name: Consolidation

• Description: The appropriation of retained earnings is a systematic statement that shows the relationship between the annual net income and the retained earnings of a company or consolidated group. Companies that represent legal entities disclose the appropriation of retained earnings, stating The retained earnings carried forward from the prior year The distributions of dividends or earnings to the shareholders of the company Other transfers or withdrawals of retained earnings to or from the appropriations accounts In practice, retained earnings statements are, in part, not prepared for non-legal entities or consolidated groups. The system, nevertheless, requires at least a simplified appropriation of retained earnings using dedicated Financial Statements FS items for each company. The appropriations of each company are combined to form the appropriations of retained earnings for the entire group also called the group appropriation of retained earnings. Additional items can be used

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• Key Concepts: 
  Appropriation of retained earnings is a process in the SAP FI-LC Consolidation component that allows companies to allocate retained earnings to different accounts. This process is used to distribute profits among shareholders, reinvest in the company, or pay dividends. 
  
  How to use it: 
  In SAP FI-LC Consolidation, appropriation of retained earnings is done by creating an appropriation account and assigning it to the appropriate accounts. The appropriation account is then used to transfer the retained earnings from one account to another. The amount of retained earnings that can be appropriated is determined by the company’s financial statements. 
  
  Tips & Tricks: 
  When appropriating retained earnings, it is important to ensure that the amount being transferred is accurate and that all accounts are properly credited and debited. Additionally, it is important to keep track of the appropriation account so that any changes can be easily tracked. 
  
  Related Information: 
  Appropriation of retained earnings is closely related to other processes such as dividend payments and capitalization of profits. It is important to understand how these processes interact with each other in order to ensure that the company’s financial statements are accurate and up-to-date.