Appropriated Retained Earnings
What are Appropriated Retained Earnings?
An appropriated retained earnings account is an equity account containing money set aside for a future project.
![are 1](https://seeaccountingnow.online/wp-content/uploads/2021/08/are-1.jpg)
How it Works
Retained earnings are the accumulation of profits that have been earned to date.
![are 2](https://seeaccountingnow.online/wp-content/uploads/2021/08/are-2.jpg)
Whenever a business makes a net profit, that profit is transferred to retained earnings
![are 3](https://seeaccountingnow.online/wp-content/uploads/2021/08/are-3.jpg)
This money can be left in retained earnings.
![are 4](https://seeaccountingnow.online/wp-content/uploads/2021/08/are-4.jpg)
Or alternatively, some or all of it can be dispersed to shareholders.
![are 5](https://seeaccountingnow.online/wp-content/uploads/2021/08/are-5.jpg)
Sometimes, though, a company will have plans for a major project.
![are 6](https://seeaccountingnow.online/wp-content/uploads/2021/08/are-6.jpg)
One way to fund such projects is by using money held in retained earnings.
![are 7](https://seeaccountingnow.online/wp-content/uploads/2021/08/are-7.jpg)
To prepare for this, the company may want to set some of its retained earnings aside.
![are 8](https://seeaccountingnow.online/wp-content/uploads/2021/08/are-8.jpg)
So they will transfer money from retained earnings to appropriated retained earnings.
![are 9](https://seeaccountingnow.online/wp-content/uploads/2021/08/are-9.jpg)
To record the transfer, you debit the retained earnings account.
![are 10](https://seeaccountingnow.online/wp-content/uploads/2021/08/are-10.jpg)
Then you credit the appropriated retained earnings account.
![are 11](https://seeaccountingnow.online/wp-content/uploads/2021/08/are-11.jpg)
As with other transfers, the normal came from/went to flow doesn’t apply to this transfer.
![are 12](https://seeaccountingnow.online/wp-content/uploads/2021/08/are-12.jpg)