This article focuses on the nature of reserve for "self-insurance." It is generally recognized that the term self-insurance is a misnomer. By its nature insurance involves a contract by which one party, for a consideration known as the premium, assumes designated risks of the other party, and promises to pay a definite or determinable amount on a specified happening. However, the term self-insurance does have some significance in that it distinguishes the policy of consciously bearing rather than transferring a calculated risk from the negligent failure to insure or in some manner provide for the risk. Montgomery is more specific in concluding that these reserves constitute segregated surplus because loss or damage is merely a possibility, the eventuality of which cannot be foreseen. Summarizing, it is the author's opinion that insurable risks can be estimated with sufficient accuracy to warrant current recognition, and that the possibility of a casualty should be considered in determining depreciation rates unless the risk is transferred to an insurer. Further, the estimated risk assumed should be matched against the revenue of the periods benefiting from the asset, and the resulting credit is properly shown as a contra to the asset.