Allowance for Credit Losses

6 Months Ended

Jun. 30, 2020

Credit Loss [Abstract]

Allowance for Credit Losses

ALLOWANCE FOR CREDIT LOSSES

The following table presents the activity in the allowance for credit losses related to the Company's financing receivables and contract assets for the six months ended June 30, 2020 (in millions):

	CRE		Land Operations		M&C
	Financing Receivables		Financing Receivables		Contract Assets		Total
Allowance for credit losses:
Balance as of January 1, 2020 (prior to adoption of ASC 326)	$	—	$	1.6	$	0.3	$	1.9
Impact of adoption of ASC 326	0.4		2.3		1.3		4.0
Provision for expected credit losses	—		0.3		—		0.3
Balance as of March 31, 2020	0.4		4.2		1.6		6.2
Provision for expected credit losses	—		(0.3)		(0.1)		(0.4)
Disposal of subsidiary	—		—		(0.1)		(0.1)
Ending allowance balance as of June 30, 2020	$	0.4	$	3.9	$	1.4	$	5.7

The credit quality of the Company's financing receivables is monitored each reporting period on an individual asset basis using specific information on the counterparties in these transactions. The following represents qualitative and quantitative information on each financing receivable within the applicable portfolios.

The CRE portfolio of financing receivables consists of one asset that originated in 2019 and had an amortized cost basis of $0.4 million as of both the adoption date of January 1, 2020 and June 30, 2020. Based on individual credit quality indicators of the counterparty as of the adoption date and June 30, 2020, the most likely outcome of expected cash flows for the asset in a range of possible outcomes (i.e., the single best estimate) was zero and, as a result, the Company recorded a full allowance for credit losses for the financing receivable on adoption of ASC 326 as of January 1, 2020 and as of June 30, 2020.

The Land Operations financing receivables consist of three assets. The first originated in 2008 and had an amortized cost basis of $1.6 million as of both the adoption date of January 1, 2020 and June 30, 2020. Based on individual credit quality indicators of the counterparty as of the adoption date and June 30, 2020, the most likely outcome of expected cash flows for the asset in a range of possible outcomes (i.e., the single best estimate) was zero and, as a result, the Company recorded a full allowance for credit losses for the financing receivable on adoption of ASC 326 as of January 1, 2020 and as of June 30, 2020. The second financing receivable within Land Operations was generated in 2016 and had an amortized cost basis of $13.5 million and $11.4 million as of the adoption date of January 1, 2020 and June 30, 2020, respectively. The third financing receivable within Land Operations was generated in 2017 and had an amortized cost basis of $2.6 million and $2.5 million as of the adoption date of January 1, 2020 and June 30, 2020, respectively. The second and third financing receivables were evaluated based on the credit quality indicators of the respective counterparties (as well as reasonable and supportable forecasts of future conditions that are relevant to determining the expected collectability of the receivable) as of the adoption date and June 30, 2020 and the estimated allowance for credit losses was calculated using a discounted cash flow approach.

The Company's contract assets represent trade receivables that are due in one year or less that result from revenue transactions from contracts with customers or other related balances that do not meet the definition of financing receivables.

For allowance for credit losses estimated using the discounted cash flow approach, changes in present value attributable to the passage of time are reported as an adjustment to credit loss expense. As a result, the provision for expected credit losses in any given period may be impacted by changes in expected credit losses on future payments or current period collections for receivables on which allowances were recorded in previous periods, both of which may be further impacted or offset by changes in present value attributable to the passage of time.