Film Accounting Glossary
Reserve
What is a reserve?
Also called residuals reserve, or reserve fund.
A reserve is money set aside against a known future obligation whose exact amount is not yet fixed, most commonly the residuals reserve a distributor or studio holds against future guild payments.
Reserves differ from contingency: a contingency covers the unforeseen, a reserve covers the foreseen but unquantified. Because reserves sit ahead of profit participants in the waterfall, their size and release schedule are frequently disputed on audit.
Example
A distributor holds a $180,000 residuals reserve against future guild payments it knows are coming but cannot yet quantify. Because reserves sit ahead of profit participants, their size and release schedule are frequently disputed on audit.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Held by the distributor or studio against foreseen but unquantified obligations, distinct from a contingency.
Common mistake
Confusing a reserve with contingency. A contingency covers the unforeseen; a reserve covers something foreseen whose amount is not yet fixed.
Related questions
- What is a residuals reserve?
- Money held by a distributor or studio against future guild residual payments it knows will arise but cannot yet quantify precisely.
- Why are reserves disputed on audit?
- Because they sit ahead of profit participants in the waterfall, so their size and release schedule directly delay or reduce what participants receive.