Phillips 66 (PSX)
Analysis of Revenues
High level of difficulty
Accounting Policy on Revenue Recognition
Phillips 66’s revenues are primarily associated with sales of refined petroleum products, crude oil and natural gas liquids (NGL). Each gallon, or other unit of measure of product, is separately identifiable and represents a distinct performance obligation to which a transaction price is allocated. The transaction prices of Phillips 66’s contracts with customers are either fixed or variable, with variable pricing based upon various market indices. For the contracts that include variable consideration, Phillips 66 utilizes the variable consideration allocation exception, whereby the variable consideration is only allocated to the performance obligations that are satisfied during the period. The related revenue is recognized at a point in time when control passes to the customer, which is when title and the risk of ownership passes to the customer and physical delivery of goods occurs, either immediately or within a fixed delivery schedule that is reasonable and customary in the industry. The payment terms with Phillips 66’s customers vary based on the product or service provided, but usually are 30 days or less.
Revenues associated with pipeline transportation services are recognized at a point in time when the volumes are delivered based on contractual rates. Revenues associated with terminaling and storage services are recognized over time as the services are performed based on throughput volume or capacity utilization at contractual rates.
Revenues associated with transactions commonly called buy/sell contracts, in which the purchase and sale of inventory with the same counterparty are entered into in contemplation of one another, are combined and reported in the “Purchased crude oil and products” line on Phillips 66’s consolidated statement of income (i.e., these transactions are recorded net).
Source: 10-K (filing date: 2019-02-22).
Revenues as Reported
Phillips 66, Income Statement, Revenues
US$ in millions
|12 months ended||Dec 31, 2018||Dec 31, 2017||Dec 31, 2016||Dec 31, 2015||Dec 31, 2014|
|Refined petroleum products|
|Crude oil resales|
|Services and other|
|Consolidated sales and other operating revenues by product line|
|Consolidated sales and other operating revenues by product line||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).||Phillips 66’s consolidated sales and other operating revenues by product line increased from 2016 to 2017 and from 2017 to 2018.|