Note 12 - Accounts Receivable and Allowance for Credit Losses

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

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

12 – 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 receivables, manufacturers’ receivables, leasing and parts and service receivables and other trade receivables. The Company maintains an allowance for credit losses based on the probability of default, its historical rate of losses, aging and current economic conditions. The Company’s assessment of future losses in the first nine months 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		Provision for the Nine Months Ended September 30, 2020		Write offs Against Allowance, net of Recoveries			Balance September 30, 2020
Commercial vehicle receivables	$	11	$	96	$	−		$	107
Manufacturers’ receivables		410		895		(1,131	)		174
Leasing, parts and service receivables		989		1,182		(1,205	)		966
Other receivables		14		15		(14	)		15
Total	$	1,424	$	2,188	$	(2,350	)	$	1,262