iRobot 2015 Annual Report Download - page 138

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iROBOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
55
audits, may result in revisions to costs and income and are recognized in the period in which the revisions are determined.
Since many contracts extend over a long period of time, revisions in cost and funding estimates during the progress of work
have the effect of adjusting earnings applicable to past performance in the current period. When the current contract estimate
indicates a loss, a provision is made for the total anticipated loss in the current period. Revenue earned in excess of billings, if
any, is recorded as unbilled revenue. Billings in excess of revenue earned, if any, are recorded as deferred revenue.
Allowance for Doubtful Accounts
The Company maintains an allowance for doubtful accounts to provide for the estimated amount of accounts receivable
that may not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment
experience and the age of outstanding receivables.
Activity related to the allowance for doubtful accounts was as follows:
Fiscal Year Ended
January 2,
2016
December 27,
2014
December 28,
2013
(In thousands)
Balance at beginning of period $67 $ 67 $111
Provision
—
—
—
Deduction(*) (34)
—
(44)
Balance at end of period $ 33 $ 67 $67
___________________________
(*) Deductions related to allowance for doubtful accounts represent amounts written off against the allowance, less
recoveries.
Inventory
Inventory is stated at the lower of cost or net realizable value with cost being determined using the first-in, first-out
(FIFO) method. The Company maintains a reserve for inventory items to provide for an estimated amount of excess or obsolete
inventory.
Activity related to the inventory reserve was as follows:
Fiscal Year Ended
January 2,
2016
December 27,
2014
December 28,
2013
(In thousands)
Balance at beginning of period $5,251 $ 5,280 $6,608
Provision 424 1,045 1,571
Deduction(*) (1,753)(1,074)(2,899)
Balance at end of period $ 3,922 $ 5,251 $5,280
___________________________
(*) Deductions related to inventory reserve accounts represent amounts written off against the reserve.
Property and Equipment
Property and equipment are recorded at cost and consist primarily of computer equipment, leasehold improvements,
business applications software and machinery. Depreciation is computed using the straight-line method over the estimated
useful lives as follows: