Annual report pursuant to Section 13 and 15(d)

Allowance for Credit Losses and Customer Allowances

v3.21.2
Allowance for Credit Losses and Customer Allowances
 12 Months Ended
Sep. 25, 2021
Receivables [Abstract]  
Allowance for Credit Losses and Customer Allowances Allowance for Credit Losses and Customer Allowances
The Company’s trade accounts receivable are recorded at net realizable value, which includes an allowance for estimated credit losses, as well as allowances for contractual customer deductions accounted for as variable consideration as described in Note 1 - Organization and Significant Accounting Policies. Under the guidance found in ASC Topic 326, the “expected credit loss” model replaces the previous incurred loss model and requires consideration of a broader range of information to estimate expected credit losses over the lives of the Company’s trade accounts receivable. The Company’s prior methodology for estimating credit losses on its trade accounts receivable did not differ significantly from the new requirements of Topic 326.
The Company maintains an allowance for credit losses related to its trade accounts receivable for future expected credit losses resulting from the inability of its customers to make required payments. The Company estimates the allowance based upon historical bad debts, current customer receivable balances and the customer’s financial condition. The allowance is adjusted to reflect differences in current conditions as well as changes in forecasted macroeconomic conditions. The Company’s estimate of credit losses includes expected current and future economic and market conditions surrounding the COVID-19 pandemic, which did not significantly impact its allowance.
The following provides a reconciliation of the activity in the Allowance for Credit Losses and Customer Allowances:
Description Balances at
Beginning
of Period		 Charged/
(Credited)  to
Costs and
Expenses		 Asset
Write-Offs,
Less
Recoveries		 Reclassification of Product Return Reserve Balances at
End of
Period
(in thousands)
Fiscal Year Ended September 28, 2019 24,125  6,906  (3,438) (6,465) 21,128 
Fiscal Year Ended September 26, 2020 21,128  6,771  (238) —  27,661 
Fiscal Year Ended September 25, 2021 27,661  6,604  (5,046) —  29,219 
The allowance for doubtful accounts includes reserves for expected returns of $6.5 million as of September 29, 2018. The Company began recording reserves for expected returns as part of accrued expenses on the consolidated balance sheet upon its adoption of ASC Topic 606. Accordingly, $6.5 million was reclassified out of the allowance for doubtful accounts at the beginning of the Company's first fiscal quarter of 2019.