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What is the difference between allowances for loan losses and provision for loan losses?
Wiki User
∙ 14y ago
The allowance for loan losses is a contra-asset account that appears on the balance sheet as an offset to loans receivable. It is an account with a running balance of the allowances for loan losses established to report loans receivable at their net realizable value. For example, if you have $100,000 in loans receivable and an allowance for loan losses of $20,000, the net realizable value of the loans receivable reported on the balance sheet would be $80,000 ($100,000 - $20,000). The allowance for loan losses is reduced when a loan or a portion of a loan is written off as uncollectible. The allowance for loan losses is increased when a provision for loan losses is established. The provision for loan losses is the current period expense for loan losses established in the current period. This provision is reported in the statement of operations (or income/loss statement). It represents the amount that is added to the allowance for loan losses in the current reporting period.
Wiki User
∙ 14y ago
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What do you mean by reserve and Provision?
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Is provision for credit losses the same as provision for loan losses?
yes it is
What is the formula of provision expense ratio?
The provision expense ratio is calculated by dividing the provision for loan losses by the average total loans outstanding during a specific period. The formula is: Provision Expense Ratio = (Provision for Loan Losses / Average Total Loans) x 100.
What do you mean by reserve and Provision?
Reserve -The funds that a company sets aside to meet future unknown losses. Provision- the funds that a company set aside to meet future known losses
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A provision of the terms of peace ending the revolutionary war that was never fulfilled was?
compensation to the loyalists for the property losses
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Explain the power flow diagram of induction motor?
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