Summary of Significant Accounting Policies (Policies)

3 Months Ended

Jan. 31, 2018

Accounting Policies [Abstract]

Accounts Receivable and Allowance for Doubtful Accounts

(a) Accounts Receivable & Allowance for Doubtful Accounts:

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable. The Company reviews its allowance for doubtful accounts monthly including the analysis of historical trends, customer credit worthiness and the aging of receivables. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Inventories

(b) Inventories:

Prior to 2017, the Company reported inventories at the lower of cost or market. Effective November 1, 2017, the Company began stating inventories prospectively at the lower of cost and net realizable value in accordance with Accounting Standards Update 2015-11 Simplifying the Measurement of Inventor. Generally, under the prior method, market was replacement cost, while net realizable value is based on the selling price of the inventory. This change had no significant effect on earnings during 2017. Cost is determined by a method that approximates the first-in, first-out method. Work in process and finished goods are valued based on underlying costs to manufacture balers which include direct materials, direct and indirect labor, and overhead. The Company reviews inventory for obsolescence on a regular basis.

Revenue Recognition

(c) Revenue Recognition:

The Company recognizes revenue when finished products and/or parts are shipped and the customer takes ownership and assumes the risk of loss. Revenue from installation services is recognized on completion of the service. The Company recognizes revenue from repair services in the period in which the service is provided.

Warranties and Service

(d) Warranties and Service:

The Company typically warrants its products for one (1) year from the date of sale as to materials and six (6) months as to labor, and offers services for other required repairs and maintenance. Service is rendered by repairing or replacing parts at the Company’s Jacksonville, Florida facility, by on-site service provided by Company personnel who are based in Jacksonville, Florida or by local service agents who are engaged as needed. The Company maintains an accrued liability for expected warranty claims. The warranty accrual is based on historical warranty costs, the quantity and types of balers currently under warranty, and known warranty issues.

Following is a tabular reconciliation of the changes in the warranty accrual for the three-month period ended January 31:

	2018			2017
Beginning balance	$	70,000		$	65,000
Warranty service provided		(33,604	)		(28,392	)
New product warranties		32,579			33,186
Changes to pre-existing warranty accruals		1,025			(4,794	)
Ending balance	$	70,000		$	65,000

Fair Value of Financial Instruments

(e) Fair Value of Financial Instruments:

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, short term certificates of deposit, accounts receivable, accounts payable, accrued liabilities, and customer deposits, approximate their fair value due to the short-term nature of these assets and liabilities.

Recent Accounting Pronouncements

(f) Recent Accounting Pronouncements:

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. This guidance supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the topic. The guidance requires an entity to recognize revenue that depicts the transfer of promised goods or services to customers in an amount that reflects the considerations to which the company expects to be entitled in exchange for those goods or services.

In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09 for all entities by one year. Public entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company does not believe this will have a significant impact on the financial statements, as contracts are generally not long term and balers are manufactured for individual orders and revenue recognized at time of shipment.