Table:
|  | Years Ended December 31, |  |
| --- | --- | --- |
|  | 2019 | 2018 |
| Balances at beginning of period | $1,856 | $1,748 |
| Additions from acquisition | 1,884 | 416 |
| Additions - charged to expense | 4,207 | 109 |
| Deductions - write-offs, net of recoveries | (202) | (417) |
| Balances at end of period | $7,745 | $1,856 |
Paragraphs:
ADVANCED ENERGY INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (in thousands, except per share amounts)
We have established an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, and other information.
Accounts Receivable and Allowance for Doubtful Accounts — Accounts receivable are recorded at net realizable value. We maintain a credit approval process and we make significant judgments in connection with assessing our customers’ ability to pay. Despite this assessment, from time to time, our customers are unable to meet their payment obligations. We continuously monitor our customers’ credit worthiness and use our judgment in establishing a provision for estimated credit losses based upon our historical experience and any specific customer collection issues that we have identified. While such credit losses have historically been within our expectations and the provisions established, there is no assurance that we will continue to experience the same credit loss rates that we have in the past. For example, in the fourth quarter, we increased our allowance for doubtful accounts by $4.2 million relating to a customer exposure in China resulting from economic softness and funding delays causing uncertainty in large program timing which uncertainty is now exacerbated by the spreading Coronavirus. A significant change in the liquidity or financial position of our customers could have a material adverse impact on the collectability of accounts receivable and our future operating results.
Changes in allowance for doubtful accounts are summarized as follows:
Question:
How did the company establish an allowance for doubtful accounts?
Answer: based upon factors surrounding the credit risk of specific customers, historical trends, and other information.