appropriation of retained earnings

Business Consolidation (SEM-BCS)

The appropriation of retained earnings (ARE) is a systematic statement which shows the relationship between the annual net income and the retained earnings of a consolidation unit or consolidation group.

For legal entities the appropriation of retained earnings includes the following:

In practice, retained earnings statements are, in part, not prepared for non-legal entities or consolidated groups. The Consolidation system, nevertheless, requires at least a simplified appropriation of retained earnings using dedicated FS items for each consolidation unit.

The appropriations of each unit are combined to form the appropriations of retained earnings for the entire group (also called the group appropriation of retained earnings). Additional items are usually used during this process to state the changes in minority interest.

The appropriation of retained earnings can either be integrated on the balance sheet or be stated as an addendum to the income statement.

Which method is used affects the retained earnings item on the balance sheet as well as the balance to be carried forward.