SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Estimates and Judgments

Preparation of financial statements requires management to make estimates and assumptions that affect reported amounts presented and disclosed in our interim Condensed Consolidated Financial Statements. Significant estimates and assumptions in these interim Condensed Consolidated Financial Statements require the exercise of judgment. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be different from these estimates.

In preparing these interim Condensed Consolidated Financial Statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation and uncertainty were the same as those applied to the Combined Financial Statements in the IPO Prospectus.

Russian Operations

On March 17, 2022, Cummins’ Board of Directors announced that Cummins would indefinitely suspend its operations in Russia due to the ongoing conflict in Ukraine. As a result of the suspension of operations, Atmus evaluated the recoverability of assets in Russia and assessed other liabilities that may have been incurred. Atmus has experienced, and expects to continue to experience, an inability to collect customer receivables from Russian customers. Atmus also determined that it has some inventory items that were designated specifically for Russia that cannot be used elsewhere.

As a result of the suspension of Russian operations, the Company established a reserve of approximately $1.7 million for accounts receivable and $0.6 million of inventory was written off during 2022. As of September 30, 2023, the accounts receivable reserve for Atmus’s Russia operations was $1.5 million and no additional inventory was written off during the year. The expense recognized in 2022 was recorded within Other operating (income) expense, net and Cost of sales in the Condensed Consolidated Statements of Net Income.