US Postal Service 2013 Annual Report Download - page 87

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2013 Report on Form 10-K United States Postal Service 85
RECEIVABLES AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
Receivables are carried at book value. Billed receivables are generally liquidated within one year and do not
have a stated interest rate.
Provision is made for doubtful accounts on outstanding receivables based on historical collection
experience and an estimate of uncollectible accounts as of the reporting date. The following summarizes
activity in the allowance for doubtful accounts:
Allowance for Doubtful Accounts
(Dollars in millions)
Beginning Balance $ 41 $ 37
Provision for Doubtful Accounts
23
11
Write-offs (10) (7)
September 30 Balance $ 54 $ 41
2013
2012
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost, which includes the interest on borrowings used to pay for the
construction of major capital additions, less accumulated depreciation. Property and equipment are
depreciated, using the straight-line method, over the estimated useful lives, which range from 3 to 40 years,
except for buildings with historic status, which are depreciated over 75 years. See Note 5, Property and
Equipment, for detailed information regarding Property and Equipment.
Leasehold improvements are amortized over the period of the lease or the useful life of the improvement,
whichever is shorter. Leasehold improvements that are placed in service after the start of the lease term
are amortized over the shorter of the useful life of the asset or the remaining lease term, including renewal
options that are reasonably assured to be executed.
The depreciation and amortization of capital assets over estimated useful lives requires management to
make judgments about future events. Capital assets are utilized over relatively long periods of time;
therefore, periodic evaluations are made to assess whether adjustments to the estimated service lives are
necessary to ensure that these estimates properly match the economic useful lives of the assets.
ASSET RETIREMENT OBLIGATIONS
A liability for the estimated costs of legally binding obligations to perform asset retirement activities is
included in “Contingent liabilities and other” on the Balance Sheets.
IMPAIRED ASSETS
In accordance with Accounting Standards Codification (ASC) Topic 360-10-35, Accounting for the
Impairment or Disposal of Long-Lived Assets, impairment losses on long-lived assets are recorded when
events or circumstances indicate that the assets’ fair value is less than the carrying value. When such a
determination is made, the carrying values of the assets are written down to fair value. Fair value is
determined by independent appraisals for real property. Due to the absence of a market for most types of
mailing equipment, impaired equipment assets are usually assigned a fair value of zero. See Note 5,
Property and Equipment, for additional information related to impairment charges for 2013, 2012, and 2011.
OUTSTANDING POSTAL MONEY ORDERS
Postal money orders are sold at retail locations. A fee is charged at the time of sale. The fee is recognized
as revenue at the time of sale. A current liability is recorded for money orders expected to be presented for
payment.