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Revenue Recognition Accounting Policy

Sales are recognized when the revenue is realized or realizable, and the earnings process is complete. Approximately 98 percent of DowDuPont's sales in 2017 related to sales of product (99 percent in 2016 and 99 percent in 2015). The remaining 2 percent in 2017 primarily related to Dow's insurance operations and licensing of patents and technology (1 percent in 2016 and 1 percent in 2015). Revenue for product sales is recognized as risk and title to the product transfer to the customer, which usually occurs at the time shipment is made. As such, title to the product passes when the product is delivered to the freight carrier. DowDuPont's standard terms of delivery are included in its contracts of sale, order confirmation documents and invoices. Freight costs and any directly related costs of transporting finished product to customers are recorded as "Cost of sales" in the consolidated statements of income.

Revenue related to Dow's insurance operations includes third-party insurance premiums, which are earned over the terms of the related insurance policies and reinsurance contracts. Revenue related to the initial licensing of patents and technology is recognized when earned; revenue related to running royalties is recognized according to licensee production levels.

DowDuPont periodically enters into prepayment contracts with customers in the Agriculture segment and receives advance payments for product to be delivered in future periods. These advance payments are recorded as deferred revenue (classified as "Accrued and other current liabilities" in the consolidated balance sheets) or debt, depending on the nature of the program. Revenue associated with advance payments is recognized as shipments are made and title, ownership and risk of loss pass to the customer.

Source: DowDuPont Inc., Annual Report


Revenues as Reported

DowDuPont Inc., Income Statement, Revenues

USD $ in millions

12 months ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Performance Materials & Coatings
Industrial Intermediates & Infrastructure
Packaging & Specialty Plastics
Electronics & Imaging
Nutrition & Biosciences
Transportation & Advanced Polymers
Safety & Construction
Net sales

Source: DowDuPont Inc. Annual Reports

Item Description The company
Net sales 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. DowDuPont Inc.'s net sales declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.