How does Epcon Communities determine the valuation allowance for expected credit losses on accounts receivable?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
The carrying amount of receivables is reduced by a valuation allowance for expected credit losses, as necessary, that reflects management's best estimate of the amount that will not be collected. This estimation takes into consideration historical experience, current conditions and, as applicable, reasonable supportable forecasts. Actual results could vary from the estimate. Accounts are charged against the allowance when management deems them to be uncollectible. Based on its assessment, management determined that the risk of credit loss was not material; therefore, there was no valuation allowance recorded as of December 31, 2023 and 2022.
Source: Item 23 — RECEIPTS (FDD pages 86–280)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, the company reduces the carrying amount of receivables by a valuation allowance for expected credit losses, if necessary. This allowance reflects management's best estimate of the amount that will not be collected.
Epcon Communities' estimation process considers historical experience, current conditions, and reasonable supportable forecasts. The company charges accounts against the allowance when management deems them uncollectible.
For the years 2023 and 2022, Epcon Communities' management determined that the risk of credit loss was not material. Consequently, no valuation allowance was recorded as of December 31, 2023, and 2022. This indicates that, based on their assessment, they believed that substantially all of the accounts receivable would be collected.