allowance for doubtful accounts

(redirected from Loan Loss Reserve)
Also found in: Acronyms.

Allowance for Doubtful Accounts

Extra funds from sales, or another source, set aside in order to pay off bad debt if and when it arises. The allowance helps a company ward off any potential cash flow problems should its credit sales not be repaid as expected. On financial statements, it is important to note that an allowance for bad debts exists for fiscal conservatism and not because one expects a large amount of bad debt to accumulate. An allowance for doubtful accounts is also called a cushion. Banks call these funds the loan loss reserve. See also: Savings account.

allowance for doubtful accounts

A balance-sheet account established to offset expected bad debts. If a firm has made a sufficient provision in its allowance for doubtful accounts, reported earnings will not be penalized by bad debts when the bad debts occur. If uncollectible accounts are larger than expected, however, the firm will have to increase the size of the account and reduce reported income. Also called allowance for bad debts, reserve for bad debts.
References in periodicals archive ?
The anticipated losses were recorded as loan loss reserves for buildings including 1330 Avenue of the Americas, which Macklowe currently owns, and 527 Madison Avenue, which Macklowe sold, the filings show.
WebEquity Solutions([R]) LLC (WebEquity) today announced the introduction of WebEquity([R]) ALLL, the industry's most comprehensive software solution to help banks systematically and accurately calculate and manage their loan loss reserves.
As disclosed in the corporation's second quarter 2002 earnings press release dated July 23, 2002, Freddie Mac conducted a review of its loan loss reserves and concluded that its loan loss reserve balance has been approximately $250 million more than the level required.
While economic conditions have steadied considerably since last fall, the need for bank institutions to maintain strong loan loss reserves has not lessened.
While Citicorp has made significant progress in strengthening loan loss reserves, capital, and improving core earnings, non-performing asset levels remain high.
This will be likely helped by CapitalSource's announced new loan loss reserve methodology.
The loan loss reserve equaled a large 107 percent of nonaccrual loans at Sept.
While asset quality indicators remain weak, with net doubtful loans accounting for a high 49% of the bank's equity at end-June 2005, Fitch considers the strengthened loan loss reserve coverage, which reached 69% at the same date, adequate.
The loan loss reserve equaled 224 percent of nonaccrual loans at the close of the third quarter.
At that date, loan loss reserve coverage was 139%, boosted by a significant increase in loan loss provisions during 2003 and 2004.
86% at end-2004 with loan loss reserve coverage of 152.
Despite sizable chargeoffs taken to facilitate the NPA reduction, FIB remained profitable during this 18-month period, resulting in higher loan loss reserve coverage and capital levels.