Appropriation of Retained Earnings on the Balance Sheet 

This type of appropriation transfers the total annual net income (group and minority interest), stated at the end of the income statement, over to the corporate group annual net income. The appropriation of retained earnings for the group and, if desired, that of the minority interest is disclosed on the balance sheet.

Select the Appr/RE on bal.sh indicator in Consolidation Version Maintenance in the Implementation Guide section Master Data.

Listed below are the items of the FS chart of accounts pertaining to the appropriation of retained earnings. The item numbers delivered in the standard SAP system have been used. The "Key" column shows the classification keys for those items requiring specification as selected items for automatic posting. The totals items contain the corresponding item ranges in the "Totals" column.

 

Balance sheet items:

Item Number

Item text

Key

Totals

2010 0000 *

Stockholders' equity

EK

2010 0000 - 2019 9999

2011 0000 *

Capital stock

 

2011 0100 - 2011 0200

2012 0000

Additional paid-in capital

   

2013 0000

Appropriated retained earnings

   
       

2014 0000 *

Retained earnings

 

2014 0000- 2014 9999

2014 1000

Annual net income (ANI)

BG

 

2014 2000

ANI preceding first consolidation

(JVE)

 

2014 3000

Unappropriated retained earnings

VTR, KKK

 

2014 4000

Transfers to appropriations

   

2014 5000

Deductions from appropriations

   

2014 6000

Distributions

DAU

 

2014 7000

consolidation of investments clearing item

MIK

 

2016 0000 *

Minority interest

 

2016 0000 - 2016 9999

2016 0100

MI in capital stock

MIN

 

2016 0200

MI in addl. paid-in capital

MIN

 

2016 0300

MI in appropriated retained earnings

MIN

 

2016 0400 *

MI in retained earnings

 

2016 0400 - 2016 0499

2016 0410

MI in annual net income

MIN

 

2016 0420

MI in ANI preceding first consolidation

MIN

 

2016 0430

MI in net profit carried fwd

MIN

 

2016 0440

MI in transfers to appropriations

MIN

 

2016 0450

MI in deductions from appropriations

MIN

 

2016 0460

MI in distributions

MIN

 

2016 0500

MI in investments

   

2016 0600

MI in hidden reserves/FVA’s

MIR

 

 

Income statement items:

Item Number

Item text

Key

Totals

3010 0000

Sales revenue

   

4011 0000 *

Investment income

BER

4011 0100 - 4011 0200

6020 0000*

ANI total

JUE

3010 0000 - 6020 0000

6030 0000

Less MI in ANI

GVM

 

6040 0000*

Annual Net Income

 

6020 0000 - 6030 0000

7100 0000

Annual Net Income

ERG

 

 

Statistical items:

Item Number

Item text

Key

Totals

9300 1000

MI in ANI / adjusted

MIG

 

9300 2000

MI in ANI / offsetting item

MIS

 

 

Remarks concerning the items and classification keys

The remarks listed below provide explanations to

Most of the selected items are only needed when implementing the automated consolidation of investments; see the explanations in the section Consolidation of Investments.

The following selected items are always required (irrespective of the consolidation of investments):

Stockholders’ equity (EK)

The "Stockholders’ equity" totals item must be specified as a selected item with classification key EK to enable the system to generate the list of interest (see also Printing Master Data, Financial Data and Control Parameters). You do this in the Implementation Guide under Master Data ® Financial Statement Items.

Appropriations

The items for both the appropriations as well as the transfers to / deductions from appropriations can be stated with more detail than in the illustration above. The minority interest items, on the other hand, are usually stated with less detail.

Annual net income on the balance sheet (BG)

The system does not support separate items for annual net profit and annual net loss. If necessary, you must manually reclassify them after the consolidation activities.

Any separate items for minority interest in annual net profit or annual net loss must also be posted manually.

Specify the "Annual net income" item as a selected item with classification key BG for the automatic postings in the Implementation Guide under Master Data ® Financial Statement Items.

Annual net income for the group on the income statement (ERG)

The annual net income on the income statement is the item corresponding to the annual net income on the balance sheet. In order to have all automatic postings to the annual net income on the balance sheet be replicated on the "Annual net income" item on the income statement, the latter must be recorded as a selected item with classification key ERG. This is also done in the Implementation Guide under Master Data ® Financial Statement Items.

Annual net income preceding first consolidation (JVE)

This item is used for storing the portion of the annual net income for a mid-year-incurred first consolidation. This is the portion of the annual net income which incurred up to the period of first consolidation. The annual net income for the periods following first consolidation are disclosed on the "Annual net income" item.

Special steps are required in the following two cases when running consolidation of investments:

In these cases, the item "Annual net income preceding first consolidation" must be specified with the classification key JVE. The system reclassifies the first consolidation portion relating to the annual net income (entry with the indicator E) from the FS item "Annual net income" (BG) to the item with the classification key JVE.

Unappropriated retained earnings (VTR)

FS items showing the appropriation of retained earnings by the group are carried forward onto this item. You can either create separate items for net profit carried forward and the net loss carried forward, respectively, or just one item for both amounts.

To enable the system to carry forward the balance when using a default FS chart of accounts, specify the following items as selected items with the classification key VTR:

You can do this in the Implementation Guide under Individual Financial Statement Data. Enter the relevant FS item as the specifying item, and the carry-forward item(s) (2014 3000) as the selected item(s). The item "Unappropriated retained earnings" should not be entered as a specifying item with the classification key VTR; being a balance sheet item, it is automatically carried forward onto itself.

All balance sheet items are carried forward onto themselves. The items above are therefore carried forward twice; onto the item "Unappropriated retained earnings" via the entry VTR and then onto itself as a balance sheet item. To reverse the carrying forward of the above items onto themselves, you must enter them with the classification key VLO. Each item must be listed as a specifying item. By entering them with the classification key VLO, the items are reset to zero after being automatically carried forward.

Cumulative posting for previous years (KKK) in consolidation of investments

If the previous years are to be posted cumulatively within the consolidation of investments, enter a selected item with classification key KKK. If the option Cumulative posting from first year is selected, all of the income statement adjustments of the previous years resulting from consolidation (e.g., goodwill amortization) are cumulatively posted to the selected item in the current year. The item you choose should not be an income statement account. The carry-forward item is an appropriate item.

An alternative is to directly reclassify the net income adjustments onto a balance sheet item (e.g., an appropriations item) by specifying it as the selected item.

Define the selected item in the Implementation Guide under Consolidation ® Consolidation of Investments.

Distribution of dividends (DAU)

You should create separate distribution items in the appropriation of retained earnings to increase clarity. When using a separate distribution item the annual net income of the previous year concurs with the carry-forward balance in the current fiscal year.

Often the distributions are not disclosed separately, but instead summarized using the carry-forward item. However, the system absolutely requires separate distribution items for the consolidation of investments. Enter these items as specifying items with classification key DAU in the Implementation Guide under Consolidation ® Consolidation of Investments.

Ensure that these items only contain distribution-related values.

You can define a totals item to summarize the distributions and the net profit/loss carried forward for reporting purposes.

Consolidation of investments clearing item (MIK)

Specify a clearing item as the selected item under classification key MIK for clearings within consolidation of investments. Do this in C/I Method Definition on the Differential detail screen. The item is generally disclosed in the net profit/loss carried forward.

In a divestiture, the reversal of retained earnings eliminations of the previous periods that do not affect net income, is posted to the clearing item.

Minority interest in equity and investments (MIN)

Two different levels of detail can be used to disclose minority interest:

Each item to be classified can be defined as a separate minority interest item.

Assign the respective minority interest items to the initial item on the Minority Interest detail screen in the Consolidation of Investments Method Definition to accommodate consolidation of investments. Afterwards, assign both the initial item and the minority interest item as selected items with classification key MIN. The minority shares are then reclassified accordingly.

You can instead define a default item for the minority interest in equity or investments.

The default item can also be entered on the Minority Interest detail screen in the Consolidation of Investments Method Definition to accommodate consolidation of investments. This item is then used for reclassification whenever no specific minority interest item has been assigned to the initial item.

Minority interest in hidden reserves (fair value adjustments) (MIR)

When applying the revaluation method, specify the FS item to be posted with minority shares in eliminated hidden reserves/FVA’s, Minority Interest detail screen in the Consolidation of Investments Method Definition. Enter the item under classification key MIR.

Minority interest in unappropriated retained earnings (VTR)

The appropriation items for minority interest are posted to this item.

When using the default FS chart of accounts specify the following items under classification key VTR to enable carrying forward of balances:

This is done in the Implementation Guide in the section Individual Financial Statement Data. Enter the items as specifying items; enter the "Minority interest in unappropriated retained earnings" (2016 0430) carry-forward item as the selected item.

Also, enter the items listed above as specifying items under classification key VLO.

See also the explanations concerning unappropriated retained earnings above.

Income from investments (BER)

Various levels of detail are available for disclosing income from investments. One or more items must be defined, depending on which level of detail is used.

To accommodate consolidation of investments, you must specify all items used for disclosing the income from investments, or their effects (e.g., adjustments for translation differences), as specifying items with classification key BER. This is done in the Implementation Guide under Consolidation ® Consolidation of Investments.

The calculation of minority interest in annual net income does not take these items into consideration, since these amounts have already been subject to a minority calculation for the distributing company.

Ensure that these items only contain amounts from distributions, and not any amounts deriving from net profit transfers, which reduce the annual net income.

Annual net income - total (JUE)

The totals item Annual net income, total includes all revenue and expense items.

The item must be specified as a selected item with classification key JUE in the Implementation Guide under Master Data ® Financial Statement Items. This selected item is needed for the list of interest.

Annual net income - minority interest (GVM)

As opposed to the corresponding item used when stating the appropriation of retained earnings at the end of the income statement, this item is not a statistical income statement item.

When using consolidation of investments, specify the item on the Minority Interest detail screen in the Consolidation of Investments Method Definition as a selected item with classification key GVM.

The program finds the annual net income, using the changes in equity table, and computes the minority interest, which is then posted to both the "Minority interest in annual net income" item on the balance sheet (MIN/credit entry) and the "Annual net income for minority interest" item on the income statement (GVM/debit entry). The adjustments to net income adjust the items "Annual net income" (BG) on the balance sheet and "Annual net income" (ERG) on the income statement.

Minority interest in annual net income (MIG/MIS)

In a multi-tiered group (A ® B ® C ) that includes minority interest on both tiers, the minority interest may not be accounted for twice in the annual net income, that was generated in C and distributed to B. The FI-LC system prevents this in this way: