Accrued fund balance (AFB): The total accrued depreciation – an indicator against which the actual or projected reserve balance can be compared to identify the direct proportion of the used-up life of the current repair or replacement cost.
Cash flow method: A method of developing a reserve funding plan where contributions to the reserve fund are designed to offset the variable annual expenditures from the reserve fund.
Component inventory: The task of selecting and quantifying reserve components.
Component method: A method of developing a reserve funding plan where the total contribution is based on the sum of contributions for individual components.
Condition assessment: The task of evaluating the current condition of components based on observed or reported characteristics.
Current replacement cost: see Replacement cost.
Deficit: An actual or projected reserve balance less than the fully funded balance.
Effective age: The difference between useful life and remaining useful life. Not always equivalent to chronological
age, since some components age irregularly. Used primarily in computations.
Financial analysis: The portion of a reserve study dealing with financial reserves.
Component full funding: When the actual or projected cumulative reserve balance for all components is equal to the fully funded balance.
Fund status: The status of the reserve fund as compared to an established benchmark such as per cent funding.
Funding goals: Independent of methodology utilised, the categories of funding plan goals are baseline funding, component full funding and threshold funding.
Funding plan: An association’s plan to provide income to a reserve fund to offset anticipated expenditures from that
Life and valuation estimates: The task of estimating useful life, remaining useful life, and repair or replacement costs for the reserve components.
Per cent funded: The ratio, at a particular point of time (typically the beginning of the fiscal year), of the actual (or projected) reserve balance to the accrued fund balance, expressed as a percentage.
Physical analysis: The portion of the reserve study where the component inventory, condition assessment, and life
and valuation estimate tasks are performed.
Remaining useful life (RUL): The estimated time, in years, that a reserve component can be expected to continue to serve its intended function.
Replacement cost: The cost of replacing, repairing or restoring a reserve component to its original functional condition.
Reserve balance: Actual or projected funds as of a particular point in time that the association has identified for use to defray the future repair or replacement of those major components that the association is obligated to maintain.
Reserve component: The individual line items in the reserve study developed or updated in the physical analysis.
Reserve provider: An individual that prepares reserve studies.
Special levy: A levy applied to the members of an association in addition to regular levies.
Surplus: An actual or projected reserve balance greater than the fully funded balance.
Useful life (UL): Total useful life or depreciable life is the estimated number of years that a reserve component can be expected to serve its intended function if it is properly constructed in its present application and/or installation.