Receivables, Net and Contract Assets

12 Months Ended

Dec. 31, 2020

Contracts-in-Transit and Vehicle Receivables

Contracts-in-transit and vehicle receivables consist primarily of amounts due from financing institutions on retail finance contracts from vehicle sales, and also includes receivables related to vehicle wholesale sales.

Accounts and Notes Receivable

Accounts and notes receivable consist primarily of amounts due from manufacturers related to dealer incentives, and also includes receivables related to parts and service sales.

The Company’s receivables and contract assets consisted of the following (in millions):


	December 31,
	2020		2019
Contracts-in-transit and vehicle receivables, net:
Contracts-in-transit	$	147.1	$	169.9
Vehicle receivables	64.5		84.3
Total contracts-in-transit and vehicle receivables	211.5		254.1
Less: allowance for doubtful accounts (1)	0.3		0.3
Total contracts-in-transit and vehicle receivables, net	$	211.2	$	253.8

Accounts and notes receivables, net:
Manufacturer receivables	$	108.7	$	123.9
Parts and service receivables	53.2		57.0
F&I receivables	27.4		28.3
Other	13.8		18.7
Total accounts and notes receivables	203.1		227.9
Less: allowance for doubtful accounts (1)	3.2		2.8
Total accounts and notes receivables, net	$	200.0	$	225.1

Within Other current assets and Other long-term assets:
Total contract assets (1), (2)	$	35.3	$	21.6

(1) The allowance for doubtful accounts as of December 31, 2020 is calculated under the current expected credit loss (“CECL”) model described below, which was introduced under ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”), that became effective for the Company on January 1, 2020. The adoption of ASC 326 did not materially change the calculation of the allowance for doubtful accounts.

(2) See further discussion of the Company’s Contract Assets balance at Note 2. Revenues. No allowance for doubtful accounts was recorded as of December 31, 2020 or December 31, 2019.

The CECL model applies to financial assets measured at amortized cost, as shown in the table above, and requires the Company to reflect expected credit losses over the remaining contractual term of the asset. As the large majority of the Company’s receivables settle within 30 days, the forecast period under the CECL model is a relatively short horizon. The Company uses an aging method to estimate allowances for doubtful accounts under the CECL model as the Company has determined that the aging method adequately reflects expected credit losses, as corroborated by historical loss-rates. However, the Company will apply adjustments for asset-specific factors and current economic conditions as needed at each reporting date. There were no adjustments for expected losses as of December 31, 2020.