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Imagine you are required to report financial statements both under GAAP and IFRS. Retained earning opening balance of year X4 is 1,500,000 based on GAAP and 600,000 based on IFRS. during year X4, you have decided to reallocate 1,000,000 from retained earnings to share capital based on GAAP figure. In this case 500,000 will remain in RE and it is okey. But if you consider IFRS retained earnings, you will face 400,000 retained loss after such action. I want to know whether such action is correct from an accounting view? Is not there any defficiency in IFRS financial statements of year X4 (Closing Balance)?

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