Revenue Recognition Accounting Policy

Home Depot recognizes revenue, net of estimated returns and sales tax, at the time the customer takes possession of merchandise or receives services. The liability for sales returns is estimated based on historical return levels. When Home Depot receives payment from customers before the customer has taken possession of the merchandise or the service has been performed, the amount received is recorded as Deferred Revenue in the accompanying Consolidated Balance Sheets until the sale or service is complete. Home Depot also records Deferred Revenue for the sale of gift cards and recognizes this revenue upon the redemption of gift cards in Net Sales. Gift card breakage income is recognized based upon historical redemption patterns and represents the balance of gift cards for which Home Depot believes the likelihood of redemption by the customer is remote. During fiscal 2013, 2012 and 2011, Home Depot recognized $30 million, $33 million and $42 million, respectively, of gift card breakage income. This income is included in the accompanying Consolidated Statements of Earnings as a reduction in SG&A.

Services Revenue

Net Sales include services revenue generated through a variety of installation, home maintenance and professional service programs. In these programs, the customer selects and purchases material for a project, and Home Depot provides or arranges professional installation. These programs are offered through Home Depot's stores and in-home sales programs. Under certain programs, when Home Depot provides or arranges the installation of a project and the subcontractor provides material as part of the installation, both the material and labor are included in services revenue. Home Depot recognizes this revenue when the service for the customer is complete.

All payments received prior to the completion of services are recorded in Deferred Revenue in the accompanying Consolidated Balance Sheets. Services revenue was $3.5 billion, $3.2 billion and $2.9 billion for fiscal 2013, 2012 and 2011, respectively.

Source: Home Depot Inc., Annual Report

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Revenues as Reported

Home Depot Inc., Income Statement, Revenues

USD $ in millions

 
12 months ended Feb 2, 2014 Feb 3, 2013 Jan 29, 2012 Jan 30, 2011 Jan 31, 2010 Feb 1, 2009
North America 70,300  66,400  62,400  60,500  59,200  63,900 
Outside of U.S. 8,500  8,400  8,000  7,500  7,000  7,400 
Net sales 78,800  74,800  70,400  68,000  66,200  71,300 

Source: Home Depot Inc. Annual Reports

Item Description The company
Net sales Aggregate revenue recognized during the period (derived from goods sold, services rendered, insurance premiums, or other activities that constitute an entity's earning process). For financial services companies, also includes investment and interest income, and sales and trading gains. Home Depot Inc.'s net sales increased from 2012 to 2013 and from 2013 to 2014.

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