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Analysis of Revenues
Revenue Recognition Accounting Policy
Home Depot recognizes revenue, net of estimated returns and sales tax, at the time the customer takes possession of merchandise or when a service is performed. The liability for sales returns, including the impact to gross profit, is estimated based on historical return levels.
Net sales include services revenue generated through a variety of installation, home maintenance, and professional service programs. In these programs, the customer selects and purchases material for a project, and Home Depot provides or arranges professional installation. These programs are offered through Home Depot’s stores and in-home sales programs. Under certain programs, when Home Depot provides or arranges the installation of a project and the subcontractor provides material as part of the installation, both the material and labor are included in services revenue. Home Depot recognizes this revenue when the service for the customer is complete.
When Home Depot receives payment from customers before the customer has taken possession of the merchandise or the service has been performed, the amount received is recorded as deferred revenue until the sale or service is complete. Home Depot also records deferred revenue for the sale of gift cards and recognizes this revenue upon the redemption of gift cards in net sales. Gift card breakage income is recognized based upon historical redemption patterns and represents the balance of gift cards for which Home Depot believes the likelihood of redemption by the customer is remote.
Source: 10-K (filing date: 2018-03-22).
Revenues as Reported
Home Depot Inc., Income Statement, Revenues
USD $ in millions
|12 months ended||Jan 28, 2018||Jan 29, 2017||Jan 31, 2016||Feb 1, 2015||Feb 2, 2014||Feb 3, 2013|
|Kitchen and Bath|
Based on: 10-K (filing date: 2018-03-22), 10-K (filing date: 2017-03-23), 10-K (filing date: 2016-03-24), 10-K (filing date: 2015-03-26), 10-K (filing date: 2014-03-27), 10-K (filing date: 2013-03-28).
|Net sales||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).||Home Depot Inc.’s net sales increased from 2016 to 2017 and from 2017 to 2018.|