reserve for losses

reserve for losses

An accounting entry made to set aside a fund for payment of possible future liabilities as a result of litigation or similar claims. If a tenant is injured after falling from a defective balcony at an apartment,that tenant might sue for damages.The apartment complex might have liability insurance, but there could be a very large deductible. If there is no doubt about the fall, no doubt about the landlord's liability,and the only issue is regarding the size of the check to the tenant,the landlord knows he or she will eventually have to pay up to the deductible limits for the injury. As a result,the landlord will probably set aside a reserve for losses in that amount.

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Section 166 (and related IRC sections 585 and 593) allow mortgagees using the reserve method of accounting for bad debts to charge the loss to the reserve for losses on qualifying real property loans.
The recharacterization will have virtually no impact on AIG's financial condition as of December 31, 2004, but will reduce the reserve for losses and loss expenses by $250 million and increase other liabilities by $245 million.
Management believes that this charge will establish a reasonable reserve for losses resulting from the disposition of the hospitality services group and operating losses from the group after the second quarter until the group is sold.
7, 1998--Capital Re Corporation (NYSE:KRE) announced today that in the third quarter it will increase its case basis loss reserve for losses arising from the bankruptcy of the Delaware Valley Obligated Group, a unit of Pittsburgh-based Allegheny Health, Education and Research Foundation ("Allegheny").
In addition, CTBI will make a special provision of $7,250,000 to the Reserve for Losses on Loans to clean up problems in the Indirect Loan Portfolio.