The Company’s accounts receivable, financing receivables and variable consideration receivables are measured on the amortized cost basis to be presented at the net amount expected to be collected.

Accounts receivable principally includes amounts currently due to the Company under theater sale and sales-type lease arrangements, contingent fees owed by theater operators as a result of box office performance and fees for theater maintenance services. Accounts receivable also includes amounts due from movie studios and other content creators for digitally remastering films into IMAX formats, as well as for film distribution and post-production services.

In order to mitigate the credit risk associated with accounts receivable, management performs an initial credit evaluation prior to entering into an arrangement with a customer and then regularly monitors the credit quality of each customer through an analysis of collections history and aging. This monitoring process includes meetings on at least a monthly basis to identify credit concerns and potential changes in credit quality classification. A customer may improve their credit quality classification once a substantial payment is made on an overdue balance or when the customer has agreed to a payment plan and payments have commenced in accordance with that plan. Changes in credit quality classification are dependent upon management approval. The Company’s internal credit quality classifications for theater operators are as follows:

The ability of the Company to collect its accounts receivable balances is heavily dependent on the viability and solvency of individual theater operators which is significantly influenced by consumer behavior and general economic conditions. Theater operators, or other customers, may experience financial difficulties, such as those imposed by the COVID-19 global pandemic, that could cause them to be unable to fulfill their payment obligations to the Company.

The Company develops its estimate of credit losses by class of receivable and customer type through a calculation that utilizes historical loss rates which are then adjusted for specific receivables that are judged to have a higher than normal risk profile after taking into account management’s internal credit quality classifications, as well as macro-economic and industry risk factors.

The following tables summarize the activity in the Allowance for Credit Losses related to Accounts Receivable for the three months ended March 31, 2021 and 2020:

	Three Months Ended March 31, 2021
(In thousands of U.S. Dollars)	Theater Operators			Studios			Other			Total
Beginning balance	$	8,368		$	4,481		$	1,446		$	14,295
Current period provision (reversal)		599			(499	)		(249	)		(149	)
Write-offs		(170	)		(149	)		—			(319	)
Foreign exchange		(14	)		(62	)		(9	)		(85	)
Ending balance	$	8,783		$	3,771		$	1,188		$	13,742

	Three Months Ended March 31, 2020
(In thousands of U.S. Dollars)	Theater Operators			Studios			Other			Total
Beginning balance	$	3,302		$	893		$	942		$	5,137
Current period provision		3,202			3,090			99			6,391
Ending balance	$	6,504		$	3,983		$	1,041		$	11,528

For the three months ended March 31, 2021, the Company reduced its allowance for current expected credit losses related to Accounts Receivable by $0.6 million principally as a result of the write-off of certain receivable balances ($0.3 million) and a net current period reversal to Credit Loss Expense ($0.1 million). The net current period reversal to Credit Loss Expense is due to better than expected collection experience with respect to foreign movie studios, partially offset by an increase in the provision associated with a higher level of accounts receivable in the period. For the three months ended March 31, 2020, the Company recorded provisions for current expected credit losses of $6.4 million, reflecting a reduction in the credit quality of and heightened collection risk associated with theater and foreign movie studio accounts receivable primarily due to the COVID-19 global pandemic.

Management believes that the March 31, 2021 allowance for current expected credit losses related to Accounts Receivable adequately addresses the risk of not collecting these receivables in full. Management’s judgments regarding expected credit losses are based on the facts available to management and involve estimates about the future. Due to the unprecedented nature of the COVID-19 pandemic, its effect on the Company’s customers and their ability to meet their financial obligations to the Company is difficult to predict. As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect (see Note 2).

Financing receivables are due from theater operators and consist of the Company’s net investment in sales-type leases and receivables associated with financed sales of IMAX Theater Systems. Similar to accounts receivable, management performs an initial credit evaluation prior to entering into an arrangement with a customer and then regularly monitors the credit quality of each customer through an analysis of collections history and aging. This monitoring process includes meetings on at least a monthly basis to identify credit concerns and potential changes in credit quality classification. A customer may improve their credit quality classification once a substantial payment is made on an overdue balance or when the customer has agreed to a payment plan and payments have commenced in accordance with that plan. Changes in credit quality classification are dependent upon management approval. The internal credit quality classifications utilized by the Company for accounts receivable, as described above, are also used for financing receivables.

The ability of the Company to collect its financing receivable balances is heavily dependent on the viability and solvency of individual theater operators which is significantly influenced by consumer behavior and general economic conditions. Theater operators may experience financial difficulties, such as those imposed by the COVID-19 global pandemic, that could cause them to be unable to fulfill their payment obligations to the Company.

As of March 31, 2021 and December 31, 2020, financing receivables consist of the following:

	March 31,			December 31,
(In thousands of U.S. Dollars)	2021			2020
Net investment in leases
Gross minimum payments due under sales-type leases	$	22,009		$	20,830
Unearned finance income		(805	)		(859	)
Present value of minimum payments due under sales-type leases		21,204			19,971
Allowance for credit losses		(581	)		(557	)
Net investment in leases		20,623			19,414
Financed sales receivables
Gross minimum payments due under financed sales		149,714			150,917
Unearned finance income		(32,010	)		(31,247	)
Present value of minimum payments due under financed sales		117,704			119,670
Allowance for credit losses		(7,491	)		(7,274	)
Net financed sales receivables		110,213			112,396
Total financing receivables	$	130,836		$	131,810

Net financed sales receivables due within one year	$	32,591		$	34,937
Net financed sales receivables due after one year		77,622			77,459
Total financed sales receivables	$	110,213		$	112,396

As of March 31, 2021 and December 31, 2020, the weighted-average remaining lease term and weighted-average interest rate associated with the Company’s sales-type lease arrangements and financed sale receivables, as applicable, are as follows:

The following tables provide information on the Company’s net investment in leases by credit quality indicator as of March 31, 2021 and December 31, 2020:

(In thousands of U.S. Dollars)	By Origination Year
As of March 31, 2021	2021		2020		2019		2018		2017		Prior		Total
Net investment in leases:
Credit quality classification:
In good standing	$	1,952	$	1,178	$	1,278	$	—	$	—	$	1,556	$	5,964
Credit Watch		—		2,918		6,979		2,671		920		960		14,448
Pre-approved transactions		—		—		—		—		—		—		—
Transactions suspended		—		—		—		—		—		792		792
Total net investment in leases	$	1,952	$	4,096	$	8,257	$	2,671	$	920	$	3,308	$	21,204

(In thousands of U.S. Dollars)	By Origination Year
As of December 31, 2020	2020		2019		2018		2017		2016		Prior		Total
Net investment in leases:
Credit quality classification:
In good standing	$	2,143	$	1,190	$	2,730	$	—	$	—	$	1,826	$	7,889
Credit Watch		2,005		7,278		—		988		—		1,047		11,318
Pre-approved transactions		—		—		—		—		—		—		—
Transactions suspended		—		—		—		—		—		764		764
Total net investment in leases	$	4,148	$	8,468	$	2,730	$	988	$	—	$	3,637	$	19,971

The following tables provide information on the Company’s financed sale receivables by credit quality indicator as of March 31, 2021 and December 31, 2020:

(In thousands of U.S. Dollars)	By Origination Year
As of March 31, 2021	2021		2020		2019		2018		2017		Prior		Total
Financed sales receivables:
Credit quality classification:
In good standing	$	413	$	5,255	$	4,386	$	2,536	$	3,370	$	15,268	$	31,228
Credit Watch		774		3,442		7,532		11,769		11,233		43,817		78,567
Pre-approved transactions		—		—		—		—		—		709		709
Transactions suspended		—		—		—		—		2,040		5,160		7,200
Total financed sales receivables	$	1,187	$	8,697	$	11,918	$	14,305	$	16,643	$	64,954	$	117,704

(In thousands of U.S. Dollars)	By Origination Year
As of December 31, 2020	2020		2019		2018		2017		2016		Prior		Total
Financed sales receivables:
Credit quality classification:
In good standing	$	6,830	$	5,480	$	3,547	$	3,740	$	5,072	$	12,660	$	37,329
Credit Watch		1,986		6,501		11,356		12,520		11,446		34,351		78,160
Pre-approved transactions		—		—		—		—		613		755		1,368
Transactions suspended		—		—		—		987		728		1,098		2,813
Total financed sales receivables	$	8,816	$	11,981	$	14,903	$	17,247	$	17,859	$	48,864	$	119,670

The following tables provide an aging analysis for the Company’s net investment in leases and financed sale receivables as of March 31, 2021 and December 31, 2020:

	As of March 31, 2021
(In thousands of U.S. Dollars)	Accrued and Current		30-89 Days		90+ Days		Billed		Unbilled		Recorded Receivable		Allowance for Credit Losses			Net
Net investment in leases	$	157	$	122	$	985	$	1,264	$	19,940	$	21,204	$	(581	)	$	20,623
Financed sales receivables		1,495		2,929		11,493		15,917		101,787		117,704		(7,491	)		110,213
Total	$	1,652	$	3,051	$	12,478	$	17,181	$	121,727	$	138,908	$	(8,072	)	$	130,836

	As of December 31, 2020
(In thousands of U.S. Dollars)	Accrued and Current		30-89 Days		90+ Days		Billed		Unbilled		Recorded Receivable		Allowance for Credit Losses			Net
Net investment in leases	$	298	$	180	$	689	$	1,167	$	18,804	$	19,971	$	(557	)	$	19,414
Financed sales receivables		3,307		1,943		10,699		15,949		103,721		119,670		(7,274	)		112,396
Total	$	3,605	$	2,123	$	11,388	$	17,116	$	122,525	$	139,641	$	(7,831	)	$	131,810

The Company considers Financing Receivables with an aging between 60-89 days as indications of theaters with potential collection concerns. At this point, the Company will begin to focus its review on these Financing Receivables and increase its discussions internally and with the theater regarding payment status. Once a theater’s aging exceeds 90 days, the Company’s policy is to perform an enhanced review to assess collectibility of the theater’s past due accounts. The over 90 days past due category may be an indicator of potential impairment as up to 90 days outstanding is considered to be a reasonable time to resolve any issues. Given the potential impacts of the COVID-19 global pandemic on the Company’s customers, management has enhanced its monitoring procedures with respect to overdue receivables.

The following table provides information about the Company’s net investment in leases and financed sale receivables with billed amounts past due for which it continues to accrue finance income as of March 31, 2021 and December 31, 2020:

	As of March 31, 2021
(In thousands of U.S. Dollars)	Accrued and Current		30-89 Days		90+ Days		Billed		Unbilled		Allowance for Credit Losses			Net
Net investment in leases	$	141	$	96	$	623	$	860	$	12,644	$	(90	)	$	13,414
Financed sales receivables		983		2,127		9,393		12,503		55,411		(2,589	)		65,325
Total	$	1,124	$	2,223	$	10,016	$	13,363	$	68,055	$	(2,679	)	$	78,739

	As of December 31, 2020
(In thousands of U.S. Dollars)	Accrued and Current		30-89 Days		90+ Days		Billed		Unbilled		Allowance for Credit Losses			Net
Net investment in leases	$	231	$	162	$	359	$	752	$	13,912	$	(310	)	$	14,354
Financed sales receivables		2,026		1,551		10,249		13,826		62,602		(4,434	)		71,994
Total	$	2,257	$	1,713	$	10,608	$	14,578	$	76,514	$	(4,744	)	$	86,348

The following table provides information about the Company’s net investment in leases and financed sale receivables that are on nonaccrual status as of March 31, 2021 and December 31, 2020:

	As of March 31, 2021							As of December 31, 2020
(In thousands of U.S. Dollars)	Recorded Receivable		Allowance for Credit Losses			Net			Recorded Receivable		Allowance for Credit Losses			Net
Net investment in leases	$	792	$	(16	)	$	776		$	764	$	(18	)	$	746
Net financed sales receivables		7,200		(2,495	)		4,705			2,813		(1,482	)		1,331
Total	$	7,992	$	(2,511	)	$	5,481		$	3,577	$	(1,500	)	$	2,077

A theater operator that is classified within the “All Transactions Suspended” category is placed on nonaccrual status and all revenue recognitions related to the theater are stopped. While the recognition of Finance Income is suspended, payments received by a customer are applied against the outstanding balance owed. If payments are sufficient to cover any unreserved receivables, a recovery of provision taken on the billed amount, if applicable, is recorded to the extent of the residual cash received. Once the collectibility issues are resolved and the customer has returned to being in good standing, the Company will resume recognition of Finance Income.

For the three months ended March 31, 2021, the Company recognized less than $0.1 million (2020 — $0.1 million) in Finance Income related to the net investment in leases with billed amounts past due. For the three months ended March 31, 2021, the Company recognized $1.2 million, respectively (2020 —$2.1 million) in Finance Income related to the financed sale receivables with billed amounts past due.

The following table summarizes the activity in the allowance for credit losses related to the Company’s net investment in leases and financed sale receivables for the three months ended March 31, 2021 and 2020:

	Three Months Ended March 31, 2021
	Net Investment			Financed
(In thousands of U.S. Dollars)	in Leases			Sales Receivables
Beginning balance	$	557		$	7,274
Current period provision		27			227
Foreign exchange		(3	)		(10	)
Ending balance	$	581		$	7,491

	Three Months Ended March 31, 2020
	Net Investment			Net Financed
(In thousands of U.S. Dollars)	in Leases			Sales Receivables
Beginning balance	$	155		$	915
Current period provision		309			2,642
Ending balance	$	464		$	3,557

For the three months ended March 31, 2021 and 2020, the Company recorded provisions for current expected credit losses related to Financing Receivables of $0.3 million and $3.0 million, respectively. The provision recorded in the prior year period reflects a reduction in the credit quality of and heightened collection risk associated with theater related Financing Receivables primarily due to the COVID-19 global pandemic. Management believes that the March 31, 2021 allowance for current expected credit losses related to Financing Receivables adequately addresses the risk of not collecting these receivables in full. Management’s judgments regarding expected credit losses are based on the facts available to management and involve estimates about the future. Due to the unprecedented nature of the COVID-19 pandemic, its effect on the Company’s customers and their ability to meet their financial obligations to the Company is difficult to predict. As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect (see Note 2).

In sale arrangements, variable consideration may become due to the Company from theater operators if certain annual minimum box office receipt thresholds are exceeded. Such variable consideration is recorded as revenue in the period when the sale is recognized and adjusted in future periods based on actual results and changes in estimates. Variable consideration is only recognized to the extent the Company believes there is not a risk of significant revenue reversal.

The ability of the Company to collect its variable consideration receivables is heavily dependent on the viability and solvency of individual theater operators which is significantly influenced by consumer behavior and general economic conditions. Theater operators may experience financial difficulties, such as those imposed by the COVID-19 global pandemic, that could cause them to be unable to fulfill their payment obligations to the Company.

The Company develops its estimate of credit losses by class of receivable and customer type through a calculation utilizing historical loss rates for financed sale receivables which are then adjusted for specific receivables that are judged to have a higher than normal risk profile after taking into account management’s internal credit quality classifications, as well as macro-economic and industry risk factors.

The following table summarizes the activity in the Allowance for Credit Losses related to Variable Consideration Receivables for the three months ended March 31, 2021 and 2020:

For the three months ended March 31, 2021 and 2020, the Company recorded provisions for current expected credit losses related to Variable Consideration Receivables of $0.2 million and $0.9 million, respectively. The provision recorded in the prior year period reflects a reduction in the credit quality of and heightened collection risk associated with Variable Consideration Receivables primarily due to the COVID-19 global pandemic. Management believes that the March 31, 2021 allowance for current expected credit losses related to Variable Consideration Receivables adequately addresses the risk of not collecting these receivables in full. Management’s judgments regarding expected credit losses are based on the facts available to management and involve estimates about the future. Due to the unprecedented nature of the COVID-19 pandemic, its effect on the Company’s customers and their ability to meet their financial obligations to the Company is difficult to predict. As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect (see Note 2).