Texas Instruments Inc. (TXN)
Analysis of Inventory
Inventory Accounting Policy
Inventories are stated at the lower of cost or estimated net realizable value. Cost is generally computed on a currently adjusted standard cost basis, which approximates cost on a first-in first-out basis. Standard cost is based on the normal utilization of installed factory capacity. Cost associated with underutilization of capacity is expensed as incurred. Inventory held at consignment locations is included in TI’s finished goods inventory. Consigned inventory was $314 million and $303 million as of December 31, 2018 and 2017, respectively.
TI reviews inventory quarterly for salability and obsolescence. A statistical allowance is provided for inventory considered unlikely to be sold. The statistical allowance is based on an analysis of historical disposal activity, historical customer shipments, as well as estimated future sales. A specific allowance for each material type will be carried if there is a significant event not captured by the statistical allowance. TI writes off inventory in the period in which disposal occurs.
Source: 10-K (filing date: 2019-02-22).
Texas Instruments Inc., Statement of Financial Position, Inventory
USD $ in millions
|Dec 31, 2018||Dec 31, 2017||Dec 31, 2016||Dec 31, 2015||Dec 31, 2014|
|Work in process|
|Inventories||Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or operating cycle, if longer.||Texas Instruments Inc.’s inventories increased from 2016 to 2017 and from 2017 to 2018.|