The case focuses on fundamental changes to the revenue recognition model and potential changes to the timing and measurement of revenue and related transactions such as product or service warranties, merchandise returns, uncollectible accounts
, and multiple deliverables.
We feel the service provided by Hunter Warfield will help us track our collection accounts more efficiently, greatly reduce the number of uncollectible accounts
and in the end increase our bottom line," said Angela Mahar, Controller of Perry Reid Properties.
Accordingly, it must report the amounts attributable to the allowance for uncollectible accounts
receivable on line 32 (Bad debt expense), and must separately state and adequately disclose the amounts attributable to the reserve for pending litigation and the warranty reserve on line 35 (Other expense/deduction items with differences).
Let's take the company earning 10% pre-tax return on annual sales of $1 million with a 5% uncollectible accounts
rate and average A/R balance of $100,000.
Additionally, the company experienced an $850,000 loss related to the writeoff of uncollectible accounts
receivable (primarily affecting three same store centers), the majority of which was attributable to a single contracting party having ceased business.
In general, the highest borrowing rates - typically on credit cards for those with subpar incomes or repayment histories - will be hit relatively lightly because they reflect more the lenders' cost of administration and write-offs of uncollectible accounts
than the cost of money.
The provision for uncollectible accounts
fell 61 percent to $245 million from $623 million in the same quarter a year earlier.
Relative to 1991 and 1993, survey respondents are more likely to reserve for uncollectible accounts
, however, they are tending to reserve less as a percentage of receivables.
Increases were noted in selling, general and administrative, including expenses from Assay Designs acquired in March 2009, higher level of sales, non-recurring accounting expenses associated with a review of historical financial information in the quarter, the provision for uncollectible accounts
receivable of $0.
The Company is also reviewing other accounting areas including, but not limited to, reserves for uncollectible accounts
receivable and inventory valuation reserves.
The company's fourth quarter EBITDA, excluding impairment of assets and other charges as well as the additional provisions for benefit related costs and uncollectible accounts
receivable, was $49.
Fingerhut, in a recently issued third-quarter 10-Q, reported that its provision for uncollectible accounts