Note 6 - Valuation Accounts

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

SEC Schedule, 12-09, Schedule of Valuation and Qualifying Accounts Disclosure [Text Block]

6. VALUATION ACCOUNTS:

Valuation and allowance accounts include the following (in thousands):

	Balance Beginning of Year		Net Charge to Costs and Expenses			Net Write- Offs			Balance End of Year
2021
Reserve for parts inventory	$	9,315	$	3,520		$	(5,375	)	$	7,460
Reserve for commercial vehicle inventory		6,075		(536	)		(4,620	)		919
2020
Reserve for parts inventory	$	7,661	$	4,501		$	(2,847	)	$	9,315
Reserve for commercial vehicle inventory		9,602		9,598			(13,125	)		6,075
2019
Reserve for accounts receivable	$	987	$	2,065		$	(2,038	)	$	1,014
Reserve for warranty receivables		429		1,661			(1,680	)		410
Reserve for parts inventory		7,050		4,460			(3,849	)		7,661
Reserve for commercial vehicle inventory		4,587		12,489			(7,474	)		9,602

Accounts Receivable and Allowance for Credit Losses

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 and leasing, parts and service sales 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 2021 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, 2020		Provision for the Year Ended December 31, 2021			Write offs Against Allowance, net of Recoveries			Balance December 31, 2021
Commercial vehicle receivables	$	172	$	(96	)	$	−		$	76
Manufacturers’ receivables		136		1,158			(875	)		419
Leasing, parts and service receivables		1,278		1,335			(1,544	)		1,069
Other receivables		19		7			−			26
Total	$	1,605	$	2,404		$	(2,419	)	$	1,590

Inventory

The Company provides a reserve for obsolete and slow moving parts. The reserve is reviewed and, if necessary, adjustments are made on a quarterly basis. The Company relies on historical information to support its reserve. Once the inventory is written down, the Company does not reverse any reserve balance until the inventory is sold.

The valuation for new and used commercial vehicle inventory is based on specific identification. A detail of new and used commercial vehicle inventory is reviewed and, if necessary, adjustments to the value of specific vehicles are made on a quarterly basis.