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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

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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 Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss). CSX Corp.’s revenue declined from 2015 to 2016 but then slightly increased from 2016 to 2017.