Analysis of Revenues
Difficulty: Advanced
Revenue Recognition Accounting Policy
CSX recognizes freight revenue using Free-On-Board Origin pursuant to the Revenue Recognition Topic in the Accounting Standards Codification ("ASC"). Accounting guidance in this topic provides for the allocation of revenue between reporting periods based on relative transit time in each reporting period. Expenses are recognized as incurred.
The certain key estimates included in the recognition and measurement of revenue and related accounts receivable under the policies described above are as follows:
- revenue associated with shipments in transit is recognized ratably over transit time and is based on average cycle times to move commodities and products from their origin to their final destination or interchange;
- adjustments to revenue for billing corrections, billing discounts and bad debts or to accounts receivable for allowances for doubtful accounts;
- adjustments to revenue for overcharge claims filed by customers, which are based on historical cash paid to customers for rate overcharges as a percentage of total billing;
- incentive-based refunds to customers, which are primarily based on customers achieving certain volume thresholds, are recorded as a reduction to revenue on the basis of management's best estimate of the projected liability (this estimate is based on historical activity, current volume levels and forecasted future volume).
CSX regularly updates the estimates described above based on historical experience and current conditions. All other revenue, such as demurrage, switching and other incidental charges are recorded upon completion of the service.
Source: 10-K (filing date: 2018-02-07).
Revenues as Reported
CSX Corp., Income Statement, Revenues
USD $ in millions
| 12 months ended | Dec 31, 2017 | Dec 30, 2016 | Dec 25, 2015 | Dec 26, 2014 | Dec 27, 2013 | |
|---|---|---|---|---|---|---|
| Merchandise business | 7,073 | 7,084 | 7,323 | 7,601 | 7,095 | |
| Coal business | 2,053 | 1,882 | 2,244 | 2,787 | 2,886 | |
| Intermodal business | 1,825 | 1,771 | 1,772 | 1,774 | 1,684 | |
| Other revenue | 457 | 332 | 472 | 507 | 361 | |
| Revenue | 11,408 | 11,069 | 11,811 | 12,669 | 12,026 |
Based on: 10-K (filing date: 2018-02-07), 10-K (filing date: 2017-02-14), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-11), 10-K (filing date: 2014-02-12).
| Item | Description | The company |
|---|---|---|
| Revenue | 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. | CSX Corp.'s revenue declined from 2015 to 2016 but then slightly increased from 2016 to 2017. |