The Company’s accounts receivable, financing receivables and variable consideration receivables are measured on the amortized cost basis and presented at the net amount expected to be collected.

Accounts receivable principally includes amounts currently due to the Company under theater sale and sales-type lease arrangements, contingent fees owed by theater operators as a result of box office performance and fees for theater maintenance services. Accounts receivable also includes amounts due to the Company from movie studios and other content creators for digitally remastering films into IMAX formats, as well as for film distribution and post-production services.

In order to mitigate the credit risk associated with accounts receivable, management performs an initial credit evaluation prior to entering into an arrangement with a customer and then regularly monitors the credit quality of each customer through an analysis of collections history and aging. This monitoring process includes meetings on at least a monthly basis to identify credit concerns and potential changes in credit quality classification. A customer may improve their credit quality classification once a substantial payment is made on an overdue balance or when the customer has agreed to a payment plan and payments have commenced in accordance with that plan. Changes in credit quality classification are dependent upon management approval. The Company’s internal credit quality classifications for theater operators are as follows:

The ability of the Company to collect its accounts receivable balances is heavily dependent on the viability and solvency of individual theater operators which is significantly influenced by consumer behavior and general economic conditions. Theater operators, or other customers, may experience financial difficulties, such as those caused by the COVID-19 global pandemic, that could result in their being unable to fulfill their payment obligations to the Company.

The Company develops its estimate of credit losses by class of receivable and customer type through a calculation that utilizes historical loss rates which are then adjusted for specific receivables that are judged to have a higher-than-normal risk profile after taking into account management’s internal credit quality classifications, as well as macro-economic and industry risk factors. The write-off of any billed receivable balance requires the approval of management.

The following tables summarize the activity in the Allowance for Credit Losses related to Accounts Receivable for the three and nine months ended September 30, 2021 and 2020:

	Three Months Ended September 30, 2021												Nine Months Ended September 30, 2021
(In thousands of U.S. Dollars)	Theater Operators			Studios			Other			Total			Theater Operators			Studios			Other			Total
Beginning balance	$	8,597		$	2,517		$	1,192		$	12,306		$	8,368		$	4,481		$	1,446		$	14,295
Current period reversal, net		(489	)		(251	)		(24	)		(764	)		(111	)		(1,928	)		(269	)		(2,308	)
Write-offs		(43	)		(270	)		—			(313	)		(278	)		(522	)		—			(800	)
Foreign exchange		(89	)		2			—			(87	)		(3	)		(33	)		(9	)		(45	)
Ending balance	$	7,976		$	1,998		$	1,168		$	11,142		$	7,976		$	1,998		$	1,168		$	11,142

	Three Months Ended September 30, 2020												Nine Months Ended September 30, 2020
(In thousands of U.S. Dollars)	Theater Operators			Studios			Other			Total			Theater Operators			Studios			Other			Total
Beginning balance	$	6,317		$	5,455		$	838		$	12,610		$	3,302		$	893		$	942		$	5,137
Current period provision (reversal), net		1,623			(262	)		468			1,829			4,718			4,424			364			9,506
Write-offs		(614	)		—			—			(614	)		(614	)		—			—			(614	)
Foreign exchange		133			184			(9	)		308			53			60			(9	)		104
Ending balance	$	7,459		$	5,377		$	1,297		$	14,133		$	7,459		$	5,377		$	1,297		$	14,133

For the three and nine months ended September 30, 2021, the Company’s allowance for current expected credit losses related to Accounts Receivable decreased by $1.2 million and $3.2 million, respectively. These decreases are principally due to the reversal of previously recorded credit loss expense as a result of an improving outlook for theater operators following the reopening of theaters and the resumption of normal film release schedules as the theatrical exhibition industry continues to recover from the COVID-19 global pandemic, as well as better than anticipated collection experience with respect to foreign studio receivable balances.

For the three and nine months ended September 30, 2020, the Company’s allowance for current expected credit losses related to Accounts Receivable increased by $1.5 million and $9.0 million, respectively, principally reflecting a reduction in the credit quality of and heightened collection risk associated with theater and foreign movie studio accounts receivable primarily due to the COVID-19 global pandemic.

Management believes that the September 30, 2021 allowance for current expected credit losses related to Accounts Receivable adequately addresses the risk of not collecting these receivables in full. Management’s judgments regarding expected credit losses are based on the facts available to management and involve estimates about the future. Due to the unprecedented nature of the COVID-19 pandemic, its effect on the Company’s customers and their ability to meet their financial obligations to the Company is difficult to predict. As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect (see Note 2).

Financing receivables are due from theater operators and consist of the Company’s net investment in sales-type leases and receivables associated with financed sales of IMAX Theater Systems. Similar to accounts receivable, management performs an initial credit evaluation prior to entering into an arrangement with a customer and then regularly monitors the credit quality of each customer through an analysis of collections history and aging. This monitoring process includes meetings on at least a monthly basis to identify credit concerns and potential changes in credit quality classification. A customer may improve their credit quality classification once a substantial payment is made on an overdue balance or when the customer has agreed to a payment plan and payments have commenced in accordance with that plan. Changes in credit quality classification are dependent upon management approval. The internal credit quality classifications utilized by the Company for accounts receivable, as described above, are also used for financing receivables.

The ability of the Company to collect its financing receivable balances is heavily dependent on the viability and solvency of individual theater operators which is significantly influenced by consumer behavior and general economic conditions. Theater operators may experience financial difficulties, such as those caused by the COVID-19 global pandemic, that could result in their being unable to fulfill their payment obligations to the Company.

As of September 30, 2021 and December 31, 2020, financing receivables consist of the following:

	September 30,			December 31,
(In thousands of U.S. Dollars)	2021			2020
Net investment in leases
Gross minimum payments due under sales-type leases	$	23,284		$	20,830
Unearned finance income		(788	)		(859	)
Present value of minimum payments due under sales-type leases		22,496			19,971
Allowance for credit losses		(494	)		(557	)
Net investment in leases		22,002			19,414
Financed sales receivables
Gross minimum payments due under financed sales		150,964			150,917
Unearned finance income		(32,199	)		(31,247	)
Present value of minimum payments due under financed sales		118,765			119,670
Allowance for credit losses		(5,565	)		(7,274	)
Net financed sales receivables		113,200			112,396
Total financing receivables	$	135,202		$	131,810

Net financed sales receivables due within one year	$	32,154		$	34,937
Net financed sales receivables due after one year		81,046			77,459
Total financed sales receivables	$	113,200		$	112,396

As of September 30, 2021 and December 31, 2020, the weighted-average remaining lease term and weighted-average interest rate associated with the Company’s sales-type lease arrangements and financed sale receivables, as applicable, are as follows:

The tables below provide information on the Company’s net investment in leases by credit quality indicator as of September 30, 2021 and December 31, 2020. The amounts disclosed for each credit quality classification are determined on a customer-by-customer basis and include both billed and unbilled amounts.

(In thousands of U.S. Dollars)	By Origination Year
As of September 30, 2021	2021		2020		2019		2018		2017		Prior		Total
Net investment in leases:
Credit quality classification:
In good standing	$	959	$	2,747	$	2,245	$	—	$	—	$	1,150	$	7,101
Credit Watch		3,374		1,251		5,650		2,533		881		863		14,552
Pre-approved transactions		—		—		—		—		—		—		—
Transactions suspended		—		—		—		—		—		843		843
Total net investment in leases	$	4,333	$	3,998	$	7,895	$	2,533	$	881	$	2,856	$	22,496

(In thousands of U.S. Dollars)	By Origination Year
As of December 31, 2020	2020		2019		2018		2017		2016		Prior		Total
Net investment in leases:
Credit quality classification:
In good standing	$	2,143	$	1,190	$	2,730	$	—	$	—	$	1,826	$	7,889
Credit Watch		2,005		7,278		—		988		—		1,047		11,318
Pre-approved transactions		—		—		—		—		—		—		—
Transactions suspended		—		—		—		—		—		764		764
Total net investment in leases	$	4,148	$	8,468	$	2,730	$	988	$	—	$	3,637	$	19,971

The tables below provide information on the Company’s financed sale receivables by credit quality indicator as of September 30, 2021 and December 31, 2020. The amounts disclosed for each credit quality classification are determined on a customer-by-customer basis and include both billed and unbilled amounts.

(In thousands of U.S. Dollars)	By Origination Year
As of September 30, 2021	2021		2020		2019		2018		2017		Prior		Total
Financed sales receivables:
Credit quality classification:
In good standing	$	6,311	$	4,414	$	5,733	$	3,831	$	5,890	$	17,830	$	44,009
Credit Watch		1,911		4,108		6,046		9,847		7,733		35,739		65,384
Pre-approved transactions		—		—		—		309		1,420		2,285		4,014
Transactions suspended		—		—		—		—		1,315		4,043		5,358
Total financed sales receivables	$	8,222	$	8,522	$	11,779	$	13,987	$	16,358	$	59,897	$	118,765

(In thousands of U.S. Dollars)	By Origination Year
As of December 31, 2020	2020		2019		2018		2017		2016		Prior		Total
Financed sales receivables:
Credit quality classification:
In good standing	$	6,830	$	5,480	$	3,547	$	3,740	$	5,072	$	12,660	$	37,329
Credit Watch		1,986		6,501		11,356		12,520		11,446		34,351		78,160
Pre-approved transactions		—		—		—		—		613		755		1,368
Transactions suspended		—		—		—		987		728		1,098		2,813
Total financed sales receivables	$	8,816	$	11,981	$	14,903	$	17,247	$	17,859	$	48,864	$	119,670

The following tables provide an aging analysis for the Company’s net investment in leases and financed sale receivables as of September 30, 2021 and December 31, 2020:

	As of September 30, 2021
(In thousands of U.S. Dollars)	Accrued and Current		30-89 Days		90+ Days		Billed		Unbilled		Recorded Receivable		Allowance for Credit Losses			Net
Net investment in leases	$	221	$	149	$	876	$	1,246	$	21,250	$	22,496	$	(494	)	$	22,002
Financed sales receivables		1,989		1,748		10,207		13,944		104,821		118,765		(5,565	)		113,200
Total	$	2,210	$	1,897	$	11,083	$	15,190	$	126,071	$	141,261	$	(6,059	)	$	135,202

	As of December 31, 2020
(In thousands of U.S. Dollars)	Accrued and Current		30-89 Days		90+ Days		Billed		Unbilled		Recorded Receivable		Allowance for Credit Losses			Net
Net investment in leases	$	298	$	180	$	689	$	1,167	$	18,804	$	19,971	$	(557	)	$	19,414
Financed sales receivables		3,307		1,943		10,699		15,949		103,721		119,670		(7,274	)		112,396
Total	$	3,605	$	2,123	$	11,388	$	17,116	$	122,525	$	139,641	$	(7,831	)	$	131,810

The Company considers Financing Receivables with an aging between 60-89 days as indications of theaters with potential collection concerns. At this point, the Company will begin to focus its review on these Financing Receivables and increase its discussions internally and with the theater regarding payment status. Once a theater’s aging exceeds 90 days, the Company’s policy is to perform an enhanced review to assess collectibility of the theater’s past due accounts. The over 90 days past due category may be an indicator of potential impairment as up to 90 days outstanding is considered to be a reasonable time to resolve any issues. Given the potential impacts of the COVID-19 global pandemic on the Company’s customers, management has enhanced its monitoring procedures with respect to overdue receivables.

The following table provides information about the Company’s net investment in leases and financed sale receivables with billed amounts past due for which it continues to accrue finance income as of September 30, 2021 and December 31, 2020. The amounts disclosed for each credit quality classification are determined on a customer-by-customer basis and include both billed and unbilled amounts.

	As of September 30, 2021
(In thousands of U.S. Dollars)	Accrued and Current		30-89 Days		90+ Days		Billed		Unbilled		Allowance for Credit Losses			Net
Net investment in leases	$	180	$	144	$	458	$	782	$	13,770	$	(248	)	$	14,304
Financed sales receivables		1,152		1,083		8,286		10,521		51,756		(2,870	)		59,407
Total	$	1,332	$	1,227	$	8,744	$	11,303	$	65,526	$	(3,118	)	$	73,711

	As of December 31, 2020
(In thousands of U.S. Dollars)	Accrued and Current		30-89 Days		90+ Days		Billed		Unbilled		Allowance for Credit Losses			Net
Net investment in leases	$	231	$	162	$	359	$	752	$	13,912	$	(310	)	$	14,354
Financed sales receivables		2,026		1,551		10,249		13,826		62,602		(4,434	)		71,994
Total	$	2,257	$	1,713	$	10,608	$	14,578	$	76,514	$	(4,744	)	$	86,348

The following table provides information about the Company’s net investment in leases and financed sale receivables that are on nonaccrual status as of September 30, 2021 and December 31, 2020:

	As of September 30, 2021							As of December 31, 2020
(In thousands of U.S. Dollars)	Recorded Receivable		Allowance for Credit Losses			Net			Recorded Receivable		Allowance for Credit Losses			Net
Net investment in leases	$	843	$	(16	)	$	827		$	764	$	(18	)	$	746
Net financed sales receivables		6,158		(1,276	)		4,882			2,813		(1,482	)		1,331
Total	$	7,001	$	(1,292	)	$	5,709		$	3,577	$	(1,500	)	$	2,077

A theater operator that is classified within the “All Transactions Suspended” category is placed on nonaccrual status and all revenue recognitions related to the theater are stopped. In certain cases, a theater operator classified within the “Pre-Approved Transactions” category may also be placed on nonaccrual status. While the recognition of Finance Income is suspended, payments received by a customer are applied against the outstanding balance owed. If payments are sufficient to cover any unreserved receivables, a recovery of provision taken on the billed amount, if applicable, is recorded to the extent of the residual cash received. Once the collectibility issues are resolved and the customer has returned to being in good standing, the Company will resume recognition of Finance Income.

For the three and nine months ended September 30, 2021, the Company recognized less than $0.1 million and $0.1 million, respectively, (2020 — $nil and $0.1 million, respectively) in Finance Income related to the net investment in leases with billed amounts past due. For the three and nine months ended September 30, 2021, the Company recognized $1.3 million and $3.6 million, respectively, (2020 — $1.4 million and $4.2 million, respectively) in Finance Income related to the financed sale receivables with billed amounts past due.

The following tables summarize the activity in the allowance for credit losses related to the Company’s net investment in leases and financed sale receivables for the three and nine months ended September 30, 2021 and 2020:

	Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021
	Net Investment			Financed			Net Investment			Financed
(In thousands of U.S. Dollars)	in Leases			Sales Receivables			in Leases			Sales Receivables
Beginning balance	$	579		$	7,113		$	557		$	7,274
Current period reversal, net		(84	)		(1,536	)		(64	)		(1,741	)
Foreign exchange		(1	)		(12	)		1			32
Ending balance	$	494		$	5,565		$	494		$	5,565

	Three Months Ended September 30, 2020						Nine Months Ended September 30, 2020
	Net Investment			Net Financed			Net Investment			Net Financed
(In thousands of U.S. Dollars)	in Leases			Sales Receivables			in Leases			Sales Receivables
Beginning balance	$	459		$	3,709		$	155		$	915
Current period provision		105			1,201			409			4,014
Write-offs		(69	)		(330	)		(69	)		(330	)
Foreign exchange		9			63			9			44
Ending balance	$	504		$	4,643		$	504		$	4,643

For the three and nine months ended September 30, 2021, the Company’s allowance for current expected credit losses related to its net investment in leases and financed sale receivables decreased by $1.6 million and $1.8 million, respectively. These decreases are principally due to the reversal of previously recorded credit loss expense as a result of an improving outlook for theater operators following the reopening of theaters and the resumption of normal film release schedules as the theatrical exhibition industry continues to recover from the COVID-19 global pandemic.

For the three and nine months ended September 30, 2020, the Company’s allowance for current expected credit losses related to its investment in leases and financed sale receivables increased by $1.0 million and $4.1 million, respectively, principally reflecting a reduction in the credit quality of and heightened collection risk associated with these receivables primarily due to the COVID-19 global pandemic.

Management believes that the September 30, 2021 allowance for current expected credit losses related to Financing Receivables adequately addresses the risk of not collecting these receivables in full. Management’s judgments regarding expected credit losses are based on the facts available to management and involve estimates about the future. Due to the unprecedented nature of the COVID-19 pandemic, its effect on the Company’s customers and their ability to meet their financial obligations to the Company is difficult to predict. As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect (see Note 2).

In sale arrangements, variable consideration may become due to the Company from theater operators if certain annual minimum box office receipt thresholds are exceeded. Such variable consideration is recorded as revenue in the period when the sale is recognized and adjusted in future periods based on actual results and changes in estimates. Variable consideration is only recognized to the extent the Company believes there is not a risk of significant revenue reversal.

The ability of the Company to collect its variable consideration receivables is heavily dependent on the viability and solvency of individual theater operators which is significantly influenced by consumer behavior and general economic conditions. Theater operators may experience financial difficulties, such as those caused by the COVID-19 global pandemic, that could result in their being unable to fulfill their payment obligations to the Company.

The Company develops its estimate of credit losses by class of receivable and customer type through a calculation utilizing historical loss rates for financed sale receivables which are then adjusted for specific receivables that are judged to have a higher-than-normal risk profile after taking into account management’s internal credit quality classifications, as well as macro-economic and industry risk factors.

The following table summarizes the activity in the Allowance for Credit Losses related to Variable Consideration Receivables for the three and nine months ended September 30, 2021 and 2020:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021			2020		2021			2020
(In thousands of U.S. Dollars)	Theater Operators			Theater Operators		Theater Operators			Theater Operators
Beginning balance	$	2,028		$	863	$	1,887		$	—
Current period (reversal) provision, net		(933	)		790		(771	)		1,653
Foreign Exchange		(1	)		6		(22	)		6
Ending balance	$	1,094		$	1,659	$	1,094		$	1,659

For the three and nine months ended September 30, 2021, the Company’s allowance for current expected credit losses related to Variable Consideration Receivables decreased by $0.9 million and $0.8 million, respectively. These decreases are principally due to the reversal of previously recorded credit loss expense as a result of an improving outlook for theater operators following the reopening of theaters and the resumption of normal film release schedules as the theatrical exhibition industry begins to recover from the COVID-19 global pandemic.

For the three and nine months ended September 30, 2020, the Company’s allowance for current expected credit losses related to Variable Consideration Receivables increased by $0.8 million and $1.7 million, respectively, principally reflecting a reduction in the credit quality of and heightened collection risk associated with Variable Consideration Receivables primarily due to the COVID-19 global pandemic.

Management believes that the September 30, 2021 allowance for current expected credit losses related to Variable Consideration Receivables adequately addresses the risk of not collecting these receivables in full. Management’s judgments regarding expected credit losses are based on the facts available to management and involve estimates about the future. Due to the unprecedented nature of the COVID-19 pandemic, its effect on the Company’s customers and their ability to meet their financial obligations to the Company is difficult to predict. As a result, the Company’s judgments and associated estimates of credit losses may ultimately prove, with the benefit of hindsight, to be incorrect (see Note 2).