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loan loss reserve: loans are going to default so banks use part of provision to book reserve. loan loss provisions: percertage of gross loans that all banks have to keep in their balance sheet as regulated
Reserve is a an amount set aside from the profit when it is calculated. On the other hand provision is an amount charged against profit and loss in order to assist in calculating the accurate profit.
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.
The Supplemental Reserve Facility provides loans to countries experiencing short-term payments problems due to a sudden loss of market confidence in the country's currency.
yeah may be because provision for doubtful debt is a reserve which has been created against the debtors which is an estimated loss and also the journal entry is [Debit] Provision for bad and doubtful debts a/c [Credit] Debtors a/c and here this loss is debited and hence it can be treated as nominal a/c but while preparing trial balance it has a credit balance as its a liability
The provision for bad debts will be categorized under the profit and loss account.
Profit & Loss A/c [Debit] Provision for bad debts [Credit]
Bad debts is the loss which we suffer. It is the nominal account which is to be transferred to P&L A/c. The provision for bad debts is to be opened in order to follow the conservatism. By nature PBD is the Accounting estimate.
Unused loan loss reserves represent an overestimation of the bad loans on the books. Ultimately, the unused loan loss reserves would be taken into income
details of profit and loss appropriation account Profit and loss appropriation account is prepared after profit and loss account..It s a account where the profits earned by the company is brought in from profit and loss accont and it s distributed to various accounts like interim divident account, provision for taxiation account, general reserve account etc.....it s a account which shows how the profits are distributed in an organisation.....
Profit and Loss.
Provision for bad and doubtful debt is not go to profit and loss account, and it is go to balance sheet.