Credit Losses

6 Months Ended

Jun. 30, 2021

7. Credit Losses

Effective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments prospectively. This ASU replaces the incurred loss impairment model with an expected credit loss impairment model for financial instruments, including trade receivables. The amendment requires entities to consider forward-looking information to estimate expected credit losses, resulting in earlier recognition of losses for receivables that are current or not yet due, which were not considered under the previous accounting guidance. Upon adoption, the Company recorded a noncash cumulative effect adjustment to retained earnings of $2.1 million, net of $0.6 million of income taxes, on the opening consolidated balance sheet as of January 1, 2020.

The Company is exposed to credit losses primarily through sales of products and services. Due to the short-term nature of such receivables, the estimate of amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances and other historical and forward-looking information on the financial condition of customers. Balances are written off when determined to be uncollectible.

The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected.


	2021		2020
Beginning Balance, December 31 of the Prior Year	$	40,474	$	29,381
Adoption of ASU 2016-13, cumulative-effect adjustment to retained earnings	—		2,706
Provision for expected credit losses, net of recoveries	2,209		8,545
Amounts written off charged against the allowance	(2,460)		(1,490)
Other, including dispositions and foreign currency translation	311		(317)
Ending balance, June 30	$	40,534	$	38,825