The annual net incomes accumulated since the founding of the company, adjusted by the distributions of dividends and retained earnings appropriations, such as transfers to or withdrawals from provisions.
Debit values are referred to as net loss.
The retained earnings (RE) of the corporate group is made up of the total RE of the consolidated companies taking into consideration the standardizing and consolidating entries as well as additional reclassifications based on the corporate policies concerning financial statements.
The way retained earnings are stated in the Consolidation system depends on the order of the items for appropriating retained earnings within the chart of accounts.
If the appropriation of retained earnings is stated on the balance sheet, then RE is defined as a totals item encompassing the financial statement item “Annual Profit”, as well as all items related to the appropriation of retained earnings.
If the appropriation of retained earnings is portrayed as an addendum to the income statement, then retained earnings is a single value item on the balance sheet. The item must then be entered accordingly on the individual financial statement (reported financial data).
Both alternatives differ from the way the SAP General Ledger portrays retained earnings. There, retained earnings is a negative balance of all other balance sheet accounts, its definition being implied.