Investor Presentaiton
Significant accounting policies and practices
Revenue recognition
We recognize revenue from sales of our products, including sales to our distributors, when title and risk of loss pass, which usually
occurs upon shipment or delivery to the customer or distributor, depending upon the terms of the sales order; when persuasive
evidence of an arrangement exists; when sales amounts are fixed or determinable; and when collectability is reasonably assured.
For sales to distributors, payment is due on our standard commercial terms and is not contingent upon resale of the products.
Revenue from sales of our products that are subject to inventory consignment agreements, including consignment arrangements
with distributors, is recognized in accordance with the principles discussed above. Delivery occurs when the customer or
distributor pulls product from consignment inventory that we store at designated locations.
We recognize revenue net of allowances, which are management's estimates of future credits to be granted to customers or
distributors under programs common in the semiconductor industry. These allowances, which are not material, generally include
volume-based incentives, product returns due to quality issues, incentives designed to maximize growth opportunities and special
pricing arrangements. Allowances are based on analysis of historical data, current economic conditions and contractual terms and
are recorded when revenue is recognized. We believe we can reasonably and reliably estimate allowances for credits to
distributors in a timely manner.
In addition, we record allowances for accounts receivable that we estimate may not be collected. We monitor collectability of
accounts receivable primarily through review of the accounts receivable aging. When collection is at risk, we assess the impact on
amounts recorded for bad debts and, if necessary, will record a charge in the period such determination is made.
We recognize in revenue shipping fees, if any, received from customers. We include shipping and handling costs in COR. The
majority of our customers pay these fees directly to third parties.
Advertising costs
We expense advertising and other promotional costs as incurred. This expense was $44 million in 2016, $46 million in 2015 and
$45 million in 2014.
Income taxes
We account for income taxes using an asset and liability approach. We record the amount of taxes payable or refundable for the
current year and the deferred tax assets and liabilities for future tax consequences of events that have been recognized in the
financial statements or tax returns. We record a valuation allowance when it is more likely than not that some or all of the deferred
tax assets will not be realized.
Other assessed taxes
Some transactions require us to collect taxes such as sales, value-added and excise taxes from our customers. These transactions
are presented in our Consolidated Statements of Income on a net (excluded from revenue) basis.
TEXAS INSTRUMENTS . 2016 FORM 10-K
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