HP 2013 Annual Report Download - page 131

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 10: Financing Receivables and Operating Leases (Continued)
for the receivable, which includes consideration of estimated proceeds from disposition of the collateral,
and calculates an estimate of the potential loss and the probability of loss. For those accounts where a
loss is probable, HP records a specific reserve. HP generally records a write-off or specific reserve when
an account reaches 180 days past due, or sooner if HP determines that the account is not collectible.
The allowance for doubtful accounts for financing receivables was as follows:
For the fiscal years
ended October 31
2013 2012 2011
In millions
Balance at beginning of year .................................. $149 $130 $140
Provision for doubtful accounts ................................ 38 42 58
Deductions, net of recoveries ................................. (56) (23) (68)
Balance at end of year ...................................... $131 $149 $130
The allowance and related gross financing receivables collectively and individually evaluated for
loss were as follows:
October 31, October 31,
2013 2012
In millions
Allowance for financing receivables collectively evaluated for loss ........... $ 95 $ 104
Allowance for financing receivables individually evaluated for loss .......... 36 45
Total ..................................................... $ 131 $ 149
Gross financing receivables collectively evaluated for loss ................. $6,773 $7,355
Gross financing receivables individually evaluated for loss ................ 380 338
Total ..................................................... $7,153 $7,693
Non-Accrual and Past-due Financing Receivables
HP considers a financing receivable to be past due when the minimum payment is not received by
the contractually specified due date. HP generally places financing receivables on non-accrual status
(suspension of interest accrual) and considers such receivables to be non-performing at the earlier of
the time at which full payment of principal and interest becomes doubtful or the receivable becomes
contractually 90 days past due. Subsequently, HP may recognize revenue on non-accrual financing
receivables as payments are received (i.e., on a cash basis) if HP deems the recorded financing
receivable to be fully collectible; however, if there is doubt regarding the ultimate collectability of the
recorded financing receivable, HP applies all cash receipts to reduce the carrying amount of the
financing receivable (i.e., the cost recovery method). In certain circumstances, such as when HP deems
a delinquency to be of an administrative nature, financing receivables may accrue interest after they
reach 90 days past due. The non-accrual status of a financing receivable may not impact a customer’s
risk rating. After all of a customer’s delinquent principal and interest balances are settled, HP may
return the related financing receivable to accrual status.
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