Self-insurance

33

• Appropriations for self-insurance:

  • To set aside retained earnings for a future purpose.
  • Mostly footnoted rather than journalized.
  • Three treatments:
    • Record losses as incurred (acceptable)
    • Appropriate retained earnings and record losses as incurred (acceptable).
    • Accrue expense and periodically set aside funds (not GAAP although until 1975 it was).

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