Note 13 - Accounts Receivable and Allowance for Credit Losses

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

13 – Accounts Receivable and Allowance for Credit Losses

The Company adopted Topic 326 on January 1, 2020. The Company did not recognize an adjustment to the beginning balance of retained earnings because the new accounting standard did not have a material impact on its consolidated financial statements. The Company establishes an allowance for credit losses to present the net amount of accounts receivable expected to be collected. Under Topic 326, the Company is required to remeasure expected credit losses for financial instruments held on the reporting date based on historical experience, current conditions and reasonable forecasts.

Accounts receivable consists primarily of commercial vehicle sales, manufacturers’ receivables, leasing and parts and service receivables and other trade receivables. The Company maintains an allowance for credit losses based on probability of default, historical rate losses, aging and economic conditions. The Company’s assessment of future losses in the first quarter of 2020 considered the impact of the COVID-19 pandemic on forecasted economic trends. The Company writes off account balances when it has exhausted reasonable collection efforts and determined that the likelihood of collection is remote. These write-offs are charged against the allowance for credit losses.

The following table summarizes the changes in the allowance for credit losses (in thousands):

	Balance December 31, 2019		Current Period Provision		Write offs Against Allowance, net of Recoveries			Balance March 31, 2020
Commercial vehicle receivables	$	11	$	171	$	(11	)	$	171
Manufacturers’ receivables		410		270		(443	)		237
Leasing, Parts and Service receivables		989		864		(641	)		1,212
Other receivables		14		47		(2	)		59
Total	$	1,424	$	1,352	$	(1,097	)	$	1,679