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Simple English definitions for legal terms
appropriated retained earnings
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A quick definition of appropriated retained earnings:
Appropriated retained earnings are the profits a company has saved up after paying dividends to shareholders. The company's board of directors sets aside these earnings for a specific purpose, so they can't be used for other things like paying dividends or expenses. It's like putting money in a piggy bank for a special toy you want to buy later, but you can't use that money for anything else until you buy the toy.
A more thorough explanation:
Definition: Appropriated retained earnings are the profits that a company's board designates for a specific purpose and are not available for paying dividends or other uses.
Example: Let's say a company has $1 million in retained earnings. The board decides to appropriate $500,000 of those earnings for research and development. This means that the company can't use that $500,000 for anything else, like paying dividends to shareholders.
Explanation: Appropriated retained earnings are a way for a company to set aside profits for a specific purpose. This helps ensure that the company has the funds it needs to invest in important projects or initiatives. By designating these earnings as appropriated, the company is signaling to shareholders that it has a plan for how it will use its profits and is committed to following through on that plan.