Revenue Recognition Accounting Policy
Medtronic sells its products primarily through a direct sales force in the U.S. and a combination of direct sales representatives and independent distributors in international markets. Medtronic recognizes revenue when title to the goods and risk of loss transfers to customers, provided there are no material remaining performance obligations required of Medtronic or any matters requiring customer acceptance. In cases where Medtronic utilizes distributors or ships product directly to the end user, it recognizes revenue upon shipment provided all revenue recognition criteria have been met. A portion of Medtronic’s revenue is generated from inventory maintained at hospitals or with field representatives. For these products, revenue is recognized at the time the product has been used or implanted. For multiple-element arrangements, Medtronic allocates revenue from the arrangement to the elements based on the relative fair value of each element, which is based on reliable and objective evidence. The fair value is generally based on the relative sales price of each element when sold separately. Medtronic records estimated sales returns, discounts, and rebates as a reduction of net sales in the same period revenue is recognized.
Source: Medtronic Inc., Annual Report
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