Basis of Presentation

9 Months Ended

Sep. 30, 2011

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

1.  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of MEDTOX Scientific, Inc. (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America.  In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of financial condition and results of operations have been included.  Operating results for the three and nine month periods ended September 30, 2011 are not necessarily indicative of the results that may be attained for the entire year. Results for the nine months ended September 30, 2011 include approximately $1.3 million of bad debt expense which related to a change in estimate in the allowance for doubtful accounts. These audited consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2010.

New Accounting Standards:  In September 2011, the Financial Accounting Standards Board (FASB) issued updated guidance on the periodic testing of goodwill for impairment.  This guidance will allow companies to assess qualitative factors to determine if it is more-likely-than-not that goodwill might be impaired and whether it is necessary to perform the two-step goodwill impairment test required under current accounting standards.  This new guidance is effective for the Company beginning January 1, 2012, with early adoption permitted.  The Company is currently evaluating this guidance, but does not expect the adoption will have a material impact on its consolidated financial statements.

In July 2011, the FASB issued guidance on the presentation and disclosure of patient service revenue, provision for bad debts, and the allowance for doubtful accounts for certain health care entities.  This guidance requires certain health care entities to change the presentation of their statement of income by reclassifying the provision for bad debts associated with patient service revenue from an operating expense to a deduction from patient service revenue (net of contractual allowances and discounts).  Additionally, those health care entities are required to provide enhanced disclosure about their policies for recognizing revenue and assessing bad debts.  The guidance also requires disclosures of patient service revenue (net of contractual allowances and discounts by major payor source) as well as qualitative and quantitative information about changes in the allowance for doubtful accounts.  This new guidance is effective for the Company beginning January 1, 2012, with early adoption permitted.  The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements.