Insurance
Discounted Claims Reserve — Long-Tail Lines
Discounting long-tail claims reserves (workers comp, bodily injury) to present value.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Discount Benefit on Claims Reserve (Income) | Revenue (+) | - | 80,000.00 |
| Outstanding Claims Reserve (Discounted) | Liability (-) | 80,000.00 | - |
💡 Accountant's Note
Long-tail claims may not be paid for 5-15 years. Discounting to present value reduces the reserve liability. Under IFRS 17, all long-tail reserves are discounted. Under IFRS 4, discounting is optional but must be disclosed.
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