Company: BKTI
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001437749-25-009464
Chunk: 582

Company: BK Technologies Corp
Filing Date: 2025-03-27
Form: 10-K
Item: Item 6
Chunk 582
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 the allowance for credit losses on trade receivables, allowance for excess or obsolete inventory, and income taxes involve certain assumptions and estimates that we believe to be reasonable under present facts and circumstances. These estimates and assumptions, if incorrect, could adversely impact our operations and financial position. 

There were no changes to our critical accounting policies during the twelve months ended December 31, 2024.

Revenue Recognition 

The Company recognizes revenues in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” and the additional related ASUs (“ASC 606”).  ASC 606 provides that sales revenue is recognized when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company generally satisfies performance obligations upon shipment of the product or service to the customer. This is consistent with the time in which the customer obtains control of the product or service. For extended warranties, sales revenue associated with the warranty is deferred at the time of sale and later recognized on a straight-line basis over the extended warranty period. Some contracts include installation services, which are completed in a short period of time and the revenue is recognized when the installation is complete. Currently, the Company does not have any contracts where revenue is recognized, but the customer payment is contingent on a future event.

Allowance for Credit Losses

The allowance for credit losses was approximately $50,000 on gross trade receivables of approximately $7.4 million as of December 31, 2024, as compared with $50,000 on gross trade receivables of approximately $7.9 million as of December 31, 2023. The Company records an allowance for credit losses for its financial instruments, which are primarily composed of trade accounts receivable.  The measurement and recognition of credit losses involves the use of judgment and represents management’s estimate of expected lifetime credit losses based on historical experience and trends, current conditions, and forecasts. The Company’s assessment of expected credit losses includes consideration of historical credit loss experience, the aging of account balances, customer concentrations, customer credit-worthiness, current and expected economic, market and industry factors affecting the Company’s customers, including their financial condition.  The Company evaluates its experience with historical losses and then applies this historical loss ratio to financial assets with similar characteristics.  The