This excerpt taken from the VLG 10-K filed Sep 28, 2006.
Valley makes estimates of the collectability of its trade receivables. Management has established an allowance for doubtful accounts to adjust the carrying value of trade receivables to fair value based on an estimate of the amount of trade receivables that are deemed uncollectible. The allowance for doubtful accounts is determined based on historical experience, economic trends and managements knowledge of significant accounts.
The roll-forward of the allowance for doubtful accounts for the years ended June 30 was as follows: