Company: HGBL
Filing Date: 2025-03-13
Form Type: 10-K
Source: 0000950170-25-038691
Chunk: 118

Company: Heritage Global Inc.
Filing Date: 2025-03-13
Form: 10-K
Item: Item 1B
Chunk 118
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, which provides authoritative guidance for the accounting of the Company’s notes receivable. The adoption of ASU 2016-13 resulted in an adjustment to retained earnings on January 1, 2023 of $0.3 million, and established an expected credit loss reserve against our receivables related to loans outstanding, including those held within equity method investments. The increase is a result of changing from an “incurred loss” model, which encompasses allowances for current known and inherent losses within the portfolio, to an “expected loss” model, which encompasses allowances for losses expected to be incurred over the life of the portfolio. 

F-9

The table below summarizes the allowance for credit loss balance as of, and the changes made during the years ending  December 31,  2024 and 2023 (in thousands):

          Accounts Receivable
           
          Notes Receivable
           
          Equity Method Investments
           
          Total

          Balance as of January 1, 2023
           
          $132
           
          $119
           
          $185
           
          $436

          Provision for credit losses
           
          —
           
          531
           
          713
           
          1,244

          Balance as of December 31, 2023
           
          132
           
          650
           
          898
           
          1,680

          (Recovery) provision for credit losses
           
          —
           
          (267)
           
          88
           
          (179)

          Balance as of December 31, 2024
           
          $132
           
          $383
           
          $986
           
          $1,501
         
        Accounts receivableThe Company carries accounts receivable at the face amounts less an allowance for estimated credit losses. The Company estimates its reserve for credit losses using relevant available information from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts.The Company only extends credit to entities and institutions of significance, such as well-known academic and financial institutions and U.S. government agencies. Consequently, historical accounts receivable credit losses are nearly zero, which provides the starting point for management’s assessment of the reserve for credit losses for its accounts receivable. The Company estimates its expected credit losses for accounts receivable based on historical credit loss experience, its assessment of current conditions, and other relevant available information from