Union Pacific Corp. (UNP)

Freight revenues are derived from contracts with customers. UPC accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. UPC’s contracts include private agreements, private rate/letter quotes, public circulars/tariffs, and interline/foreign agreements. The performance obligation in UPC’s contracts is typically delivering a specific commodity from a place of origin to a place of destination and the commitment begins with the tendering and acceptance of a freight bill of lading and is satisfied upon delivery at destination. UPC considers each freight shipment to be a distinct performance obligation.

UPC recognizes freight revenues over time as freight moves from origin to destination. The allocation of revenue between reporting periods is based on the relative transit time in each reporting period with expenses recognized as incurred. Outstanding performance obligations related to freight moves in transit totaled $123 million at December 31, 2018 and $154 million at December 31, 2017 and are expected to be recognized in the next quarter as UPC satisfies the remaining performance obligations and delivers freight to destination. The transaction price is generally specified in a contract and may be dependent on the commodity, origin/destination, and route. Customer incentives, which are primarily provided for shipping a specified cumulative volume or shipping to/from specific locations, are recorded as a reduction to operating revenues based on actual or projected future customer shipments.

Under typical payment terms, the customers pay UPC after each performance obligation is satisfied and there are no material contract assets or liabilities associated with the freight revenues. Outstanding freight receivables are presented in UPC’s Consolidated Statement of Financial Position as Accounts Receivables, net.

Freight revenue related to interline transportation services that involve other railroads are reported on a net basis. The portion of the gross amount billed to customers that is remitted by UPC to another party is not reflected as freight revenue.

Other revenues consist primarily of revenues earned by UPC’s other subsidiaries (primarily logistics and commuter rail operations) and accessorial revenues. Other subsidiary revenues are generally recognized over time as shipments move from origin to destination. The allocation of revenue between reporting periods is based on the relative transit time in each reporting period with expenses recognized as incurred. Accessorial revenues are recognized at a point in time as performance obligations are satisfied.

Source: 10-K (filing date: 2019-02-08).

Union Pacific Corp., Income Statement, Revenues

USD $ in millions

	12 months ended	Dec 31, 2018		Dec 31, 2017		Dec 31, 2016		Dec 31, 2015		Dec 31, 2014
	Agricultural Products
	Energy
	Industrial
	Premium
	Freight revenues
	Other subsidiary revenues
	Accessorial revenues
	Other
	Operating revenues

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-06).