How do I reclassify expense appropriations to equity

Ensure you are using appropriations correctly

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Reclassify steps

This can be a headache for some of our clients.

Our systems require appropriations to be in Equity, not expense accounts.

AASB also requires dividends and distributions to be in equity, as they are not expenses. 

This image shows appropriations in Equity.

1 - Make a judgement call

1. You will need to reclassify some transactions - mostly this year and maybe last year.
2. The question is, do you want to reclassify the entire Xero? - this will take time
3. The thing about appropriations in equity is, you will need to reverse them to retained earnings
4. So there is some work to do
5. Choose well

2 - Add new accounts

1. Duplicate your expense accounts but stick the words (Equity) in brackets on the end of the account name
2. In reporting name, remove (Equity)
3. You can now reclassify the transactions, but, there is one more step

3 - Map the accounts

1. Dividends = EQU.RET.DIV
2. Income tax = EQU.UDE.3
3. Distributions (Trusts and partnershsips) = EQU.UDE.3

4 - Reclassify the past appropriations

1. Go to the transaction, edit it, change the account from expense to equity account
2. Done

5 - Reverse / roll over the appropriation

1. Final step, on 1 July, reverse the equity to retained earnings
2. Known as a "roll over" journal