Effective October 1, 2018, Ashland adopted accounting guidance outlining a single comprehensive five step model for entities to use in accounting for revenue arising from contracts with customers (ASC 606 Revenue from Contracts with Customers). As a result of the adoption, there was no material impact to Ashland’s Condensed Consolidated Financial Statements. The additional disclosures that Ashland is required to disclose on an interim and annual basis are contained within this Note O.

Ashland’s revenue is measured as the amount of consideration it expects to receive in exchange for transferring goods or providing services and is recognized when performance obligations are satisfied under the terms of contracts with customers. Ashland generally utilizes standardized language for the terms of contracts within each purchase order, unless a separate agreement has been entered into with a customer that supersedes the standard language within the purchase order.

A performance obligation is deemed to be satisfied by Ashland when control of the product or service is transferred to the customer. The transaction price of a contract, or the amount Ashland expects to receive upon satisfaction of all performance obligations, is determined by reference to the contract’s terms and includes adjustments, if applicable, for any variable consideration, such as volume discounts, rebates, refunds and rights to return. Where a contract contains more than one distinct performance obligation, the transaction price is allocated to each performance obligation based on the standalone selling price of each performance obligation, although these situations do not occur frequently and are generally not included within Ashland’s contracts. Any unsatisfied performance obligations were not material. Standalone selling prices are based on prices Ashland charges to customers, which in some cases are based on established market prices. Ashland generally collects the cash from its customers within 60 days of the product delivery date. Sales and other similar taxes collected from customers on behalf of third parties are excluded from the contract price.

All of Ashland’s revenue is derived from contracts with customers, and nearly all contracts with customers contain one performance obligation for the transfer of goods where such performance obligation is satisfied at a point in time. Control of a product is deemed to be transferred to the customer generally upon shipment or delivery. Costs for shipping and handling activities, whether performed before or after the customer obtains control of the goods, are accounted for as fulfillment costs when not reimbursed.

Costs incurred to obtain contracts with customers have historically not been significant and are expensed immediately as the period of performance is generally one year or less. Ashland records bad debt expense in specific situations when it is determined that the customer is unable to meet its financial obligation.

Upon adoption, Ashland utilized the following applicable practical expedients, as permitted by ASC 606, Revenue from Contracts with Customers:

Trade receivables are defined as receivables arising from contracts with customers and are recorded within the accounts receivable caption within the Condensed Consolidated Balance Sheets. Ashland’s trade receivables were $472 million and $482 million as of June 30, 2019 and September 30, 2018, respectively.

Ashland disaggregates its revenue from contracts with customers by segment, geographical region and product category, as Ashland believes these categories best depict how management reviews the financial performance of its operations for the three and nine months ended June 30, 2018 and 2019. See the following tables for details:

Sales by geography
(In millions)	Specialty Ingredients				Intermediates and Solvents
Geography	2019		2018		2019		2018
Three months ended June 30
North America	$	246	$	253	$	15	$	14
Europe		204		208		5		6
Asia Pacific		117		121		7		9
Latin America & other		46		56		1		1
	$	613	$	638	$	28	$	30

Nine months ended June 30
North America	$	712	$	733	$	42	$	42
Europe		594		597		16		19
Asia Pacific		348		339		20		23
Latin America & other		149		165		3		4
	$	1,803	$	1,834	$	81	$	88

Sales by product category
(In millions)	2019		2018
Three months ended June 30
Ashland Specialty Ingredients
Cellulosics	$	219	$	223
Poly-vinyl pyrrolidones		108		110
Adhesives		88		90
Actives		36		36
Vinyl ethers		25		39
Pharmachem		59		55
Other		78		85
	$	613	$	638
Intermediates and Solvents
Derivatives	$	22	$	25
Butanediol		6		5
	$	28	$	30

Total	$	641	$	668

Sales by product category
(In millions)	2019		2018
Nine months ended June 30
Ashland Specialty Ingredients
Cellulosics	$	633	$	616
Poly-vinyl pyrrolidones		312		320
Adhesives		259		259
Actives		116		116
Vinyl ethers		80		106
Pharmachem		182		176
Other		221		241
	$	1,803	$	1,834
Intermediates and Solvents
Derivatives	$	67	$	73
Butanediol		14		15
	$	81	$	88

Total	$	1,884	$	1,922