Boeing Co. (BA)
Analysis of Revenues
Revenue Recognition Accounting Policy
The majority of Boeing’s BCA segment revenue is derived from commercial aircraft contracts. For each contract, Boeing determines the transaction price based on the consideration expected to be received. Boeing allocates the transaction price to each commercial aircraft performance obligation based on relative standalone selling prices adjusted by an escalation formula as specified in the customer agreement. Revenue is recognized for each commercial aircraft performance obligation at the point in time when the aircraft is completed and accepted by the customer. Boeing uses program accounting to determine the amount reported as cost of sales.
Where an aircraft is still in Boeing’s possession, and title and risk of loss has passed to the customer (known as a bill-and-hold arrangement), revenue will be recognized when all specific requirements for transfer of control under a bill-and-hold arrangement have been met.
Payments for commercial aircraft sales are received in accordance with the customer agreement, which generally includes a deposit upon order and additional payments in accordance with a payment schedule, with the balance being due immediately prior to or at aircraft delivery. Advances and progress billings (contract liabilities) are normal and customary for commercial aircraft contracts and not considered a significant financing component as they are intended to protect Boeing from the other party failing to adequately complete some or all of its obligations under the contract.
Source: 10-K (filing date: 2019-02-08).
Revenues as Reported
Boeing Co., Income Statement, Revenues
US$ in millions
|12 months ended||Dec 31, 2018||Dec 31, 2017||Dec 31, 2016||Dec 31, 2015||Dec 31, 2014|
|Defense, Space & Security|
|Unallocated items, eliminations and other|
|Revenues||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).||Boeing Co.’s revenues declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.|