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.

The remarks listed below provide explanations to

• the items listed above

• the selected items required for stating the retained earnings.

• Stockholders’ equity (EK)
• Retained earnings/balance sheet (BG)
• Retained earnings/income statement (ERG)
• Annual net income, total (JUE)
• Net profit/loss carried forward (VTR/VLO)

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.

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.

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:

• Annual net income is not separately disclosed. Instead, the entire annual net income including the first consolidation portion is entered on the annual net income item.

• The first consolidation for a subgroup occurs in a period following the first consolidation for the corporate group.

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.

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:

• Annual net income (ANI) (2014 1000)

• ANI preceding first consolidation (2014 2000)

• Transfers to appropriations (2014 4000)

• Deductions from appropriations (2014 5000)

• Distributions (2014 6000)

• Consolidation of investments clearing item (2014 7000)

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.

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.

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.

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.

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

• Minority interest by equity item/investment item

• Default item

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.

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:

• Minority interest in annual net income (2016 0410)

• Minority interest in annual net income preceding first consolidation (2016 0420)

• Minority interest in transfers to appropriations (2016 0440)

• Minority interest in deductions from appropriations (2016 0450)

• Minority interest in distributions (2016 0460)

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.

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.

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

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.

• On reports one often likes to disclose the respective minority interest in annual net income without the investment income that has been received. That is why this amount is also posted to the statistical items MIG and MIS (using reversed signs).

• The "Minority interest in annual net income" (MIN) item on the balance sheet and the statistical item MIG both have the same value when viewing the companies B and C together.

• In cases where company A owns 100% of company B, the "Minority interest in annual net income" (MIN) item on the balance sheet and the statistical items MIG both show the same value when viewing either company B or C.