Revenue Recognition Accounting Policy
U.S. Domestic and International Package Operations
Revenue is recognized upon delivery of a letter or package.
Forwarding and Logistics
Freight forwarding revenue and the expense related to the transportation of freight are recognized at the time the services are performed. Material management and distribution revenue is recognized upon performance of the service provided. Customs brokerage revenue is recognized upon completing documents necessary for customs entry purposes.
Freight
Revenue is recognized upon delivery of a less-than-truckload ("LTL") or truckload ("TL") shipment.
UPS utilizes independent contractors and third party carriers in the performance of some transportation services. In situations where UPS acts as principal party to the transaction, UPS recognizes revenue on a gross basis; in circumstances where UPS acts as an agent, UPS recognizes revenue net of the cost of the purchased transportation.
Financial Services
Income on loans and direct finance leases is recognized on the effective interest method. Accrual of interest income is suspended at the earlier of the time at which collection of an account becomes doubtful or the account becomes 90 days delinquent. Income on operating leases is recognized on the straight-line method over the terms of the underlying leases.
Source: United Parcel Service Inc., Annual Report
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