Our accounts receivable segment primarily consists of amounts currently due from customers, including service and leased device receivables, handset insurance administrators, wholesale partners, other carriers and third-party retail channels.

We estimate expected credit losses associated with our accounts receivable portfolio using an aging schedule methodology that utilizes historical information and current conditions to develop expected credit losses by aging bucket, including for receivables that are not past due.

To determine the appropriate credit loss percentages by aging bucket, we consider a number of factors, including our overall historical credit losses, net of recoveries and timely payment experience as well as current collection trends such as write-off

frequency and severity, credit quality of the customer base, and other qualitative factors such as macro-economic conditions, including the expected economic impacts of the COVID-19 pandemic.

We consider the need to adjust our estimate of expected credit losses for reasonable and supportable forecasts of future economic conditions. To do so, we monitor professional forecasts of changes in real U.S. gross domestic product and forecasts of consumer credit behavior for comparable credit exposures. We also periodically evaluate other economic indicators such as unemployment rates to assess their level of correlation with our historical credit loss statistics.

Based upon customer credit profiles at the time of customer origination, we classify the EIP receivables segment into two customer classes of “Prime” and “Subprime.” Prime customer receivables are those with lower credit risk and Subprime customer receivables are those with higher credit risk. Customers may be required to make a down payment on their equipment purchases. In addition, certain customers within the Subprime category are required to pay an advance deposit.

To determine a customer’s credit profile, we use a proprietary credit scoring model that measures the credit quality of a customer using several factors, such as credit bureau information, consumer credit risk scores and service and device plan characteristics.

Installment loans acquired in the Merger are included in EIP receivables. We applied our proprietary credit scoring model to the customers acquired in the Merger with an outstanding EIP receivable balance. Based on tenure, consumer credit risk score and credit profile, these acquired customers were classified into our customer classes of Prime or Subprime. Our proprietary credit scoring model is applied to all EIP arrangements originated after the Merger close date.


(in millions)	June 30, 2020		December 31, 2019


EIP receivables, gross ⁽¹⁾	$	5,084	$	4,582
Unamortized imputed discount	(229)		(299)

EIP receivables, net of unamortized imputed discount	4,855		4,283
Allowance for credit losses ⁽²⁾	(262)		(100)

EIP receivables, net of allowance for credit losses and imputed discount	$	4,593	$	4,183
Classified on the balance sheet as:
Equipment installment plan receivables, net of allowance for credit losses and imputed discount	$	3,194	$	2,600
Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount	1,399		1,583

EIP receivables, net of allowance for credit losses and imputed discount	$	4,593	$	4,183

(1) Through the Merger, we acquired EIP receivables with a fair value of $1.3 billion as of April 1, 2020. As they were recorded at fair value, an imputed discount was not recognized on the acquired receivables.

(2) Allowance for credit losses as of June 30, 2020 was impacted by the cumulative effect of initially applying the new credit loss standard on our receivables portfolio on January 1, 2020, which resulted in an increase to our allowance for credit losses of $91 million.

We manage our EIP receivables portfolio using customer credit class and tenure as key credit quality indicators. As a part of the adoption of the new credit loss standard, we now disclose our EIP receivables portfolio disaggregated by origination year. EIP receivables acquired through the Merger are also presented by origination year. The following table presents the amortized cost of our EIP receivables by delinquency status, customer credit class, and year of origination as of June 30, 2020.


	Originated in 2020						Originated in 2019						Originated prior to 2019						Total EIP Receivables, net of unamortized imputed discounts
(in millions)	Prime		Subprime		Prime		Subprime		Prime		Subprime		Prime		Subprime		Grand total
Current - 30 days past due	$	973	$	1,222	$	1,041	$	1,034	$	291	$	146	$	2,305	$	2,402	$	4,707
31 - 60 days past due	7		17		12		29		3		5		22		51		73
61 - 90 days past due	3		8		5		15		1		2		9		25		34
More than 90 days past due	2		6		6		19		2		6		10		31		41
EIP receivables, net of unamortized imputed discount	$	985	$	1,253	$	1,064	$	1,097	$	297	$	159	$	2,346	$	2,509	$	4,855

We estimate expected credit losses on our EIP receivables by using historical data adjusted for current conditions to calculate default probabilities for our outstanding EIP loans. We consider various risk characteristics when calculating default probabilities, such as how long such loans have been outstanding, customer credit ratings, customer tenure, delinquency status and other correlated variables identified through statistical analyses. We multiply these estimated default probabilities by our estimated loss given default, which considers recoveries.

As we do for our accounts receivable portfolio segment, we consider the need to adjust our estimate of expected losses on EIP receivables for reasonable and supportable forecasts of economic conditions through monitoring of external professional forecasts and periodic internal statistical analyses, including the expected economic impacts of the COVID-19 pandemic.

acquisition date is accreted to interest income over the contractual life of the loan using the effective interest method. EIP receivables had a combined weighted average effective interest rate of 7.7% and 8.8% as of June 30, 2020 and December 31, 2019, respectively.

Activity for the six months ended June 30, 2020 and 2019, in the allowance for credit losses and unamortized imputed discount balances for the accounts receivable and EIP receivables segments were as follows:


	June 30, 2020										June 30, 2019
(in millions)	Accounts Receivable Allowance		EIP Receivables Allowance		Total		Accounts Receivable Allowance		EIP Receivables Allowance				Total

Allowance for credit losses and imputed discount, beginning of period	$	61	$	399	$	460	$	67	$	449	$	516
Beginning balance adjustment due to implementation of the new credit loss standard	—		91		91		—		—		—

Bad debt expense	178		168		346		31		113		144
Write-offs, net of recoveries	(56)		(96)		(152)		(37)		(127)		(164)
Change in imputed discount on short-term and long-term EIP receivables	N/A		10		10		N/A		89		89
Impact on the imputed discount from sales of EIP receivables	N/A		(81)		(81)		N/A		(84)		(84)

Allowance for credit losses and imputed discount, end of period	$	183	$	491	$	674	$	61	$	440	$	501

We do not have material, unmitigated off-balance-sheet credit exposures as of June 30, 2020. In connection with the sales of certain service and EIP accounts receivable pursuant to the sale arrangements, we have deferred purchase price assets included in our Condensed Consolidated Balance Sheets measured at fair value that are based on a discounted cash flow model using unobservable Level 3 inputs, including customer default rates and credit worthiness, dilutions and recoveries. See Note 4 – Sales of Certain Receivables for further information.