REVENUE

Revenue Recognition

Products

Substantially all of DuPont's revenue is derived from product sales. Product sales consist of sales of DuPont's products to supply manufacturers, distributors, and farmers. DuPont considers purchase orders, which in some cases are governed by master supply agreements, to be a contract with a customer. Contracts with customers are considered to be short-term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year.

Revenue from product sales is recognized when the customer obtains control of the company's product, which occurs at a point in time according to shipping terms. Payment terms for contracts related to product lines other than agriculture generally average 30 to 60 days after invoicing, depending on business and geography. Payment terms for agriculture product line contracts are generally less than one year from invoicing. The company elected the practical expedient and will not adjust the promised amount of consideration for the effects of a significant financing component when DuPont expects it will be one year or less between when a customer obtains control of the company's product and when payment is due. The company has elected to recognize shipping and handling activities when control has transferred to the customer as an expense in cost of goods sold. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues. In addition, DuPont elected the practical expedient to expense any costs to obtain contracts as incurred, as the amortization period for these costs would have been one year or less.

The transaction price includes estimates of variable consideration, such as rights of return, rebates, and discounts, that are reductions in revenue. All estimates are based on the company's historical experience, anticipated performance, and the company's best judgment at the time the estimate is made. Estimates for variable consideration are reassessed each reporting period and are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur upon resolution of uncertainty associated with the variable consideration. The majority of contracts have a single performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as quantity times price per unit. For contracts with multiple performance obligations, DuPont allocates the transaction price to each performance obligation based on the relative standalone selling price. The standalone selling price is the observable price which depicts the price as if sold to a similar customer in similar circumstances.

Licenses of Intellectual Property

DuPont enters into licensing arrangements with customers under which it licenses its intellectual property, such as patents and trademarks. Revenue from the majority of intellectual property licenses is derived from sales-based royalties. The company estimates the expected amount of sales-based royalties based on historical sales by customer. Revenue for licensing agreements that contain sales-based royalties is recognized at the later of (i) when the subsequent sale occurs or (ii) when the performance obligation to which some or all of the royalty has been allocated is satisfied.

Contract Balances

Contract liabilities primarily reflect deferred revenue from prepayments under agriculture product line contracts with customers where the company receives advance payments for products to be delivered in future periods. DuPont classifies deferred revenue as current or noncurrent based on the timing of when the company expects to recognize revenue. Contract assets primarily include amounts related to contractual rights to consideration for completed performance not yet invoiced within the industrial biosciences product line. Accounts receivable are recorded when the right to consideration becomes unconditional.



Contract Balances	March 31, 2018		Topic 606 Adjustments January 1, 2018		December 31, 2017
(In millions)	March 31, 2018		Topic 606 Adjustments January 1, 2018		December 31, 2017
Accounts and notes receivable - trade¹	$	5,699	$	87	$	3,976
Contract assets - current²	$	57	$	54	$	—
Deferred revenue - current³	$	1,904	$	2	$	2,014
Deferred revenue - noncurrent⁴	$	49	$	—	$	48


^1.	Included in accounts and notes receivable - net in the Consolidated Balance Sheets.


^2.	Included in other current assets in the Consolidated Balance Sheets.


^3.	Included in accrued and other current liabilities in the Consolidated Balance Sheets.


^4.	Included in other noncurrent obligations in the Consolidated Balance Sheets.

The decrease in deferred revenue from December 31, 2017 to March 31, 2018 was primarily due to the timing of agriculture product line seed deliveries to customers for the North America growing season. Revenue recognized during the three months ended March 31, 2018 from amounts included in deferred revenue at the beginning of the period was $563 million.

Disaggregation of Revenue

Effective with the Merger, DuPont’s business activities are components of its parent company’s business operations. DuPont’s business activities, including the assessment of performance and allocation of resources, are reviewed and managed by DowDuPont. Information used by the chief operating decision maker of DuPont relates to the company in its entirety. Accordingly, there are no separate reportable business segments for DuPont under ASC Topic 280 “Segment Reporting” and DuPont's business results are reported in this Form 10-Q as a single operating segment.

The company has one reportable segment with the following principal product lines: agriculture, packaging and specialty plastics, electronics and imaging, nutrition and health, industrial biosciences, transportation and advanced polymers and safety and construction. The company believes disaggregation of revenue by principal product line best depicts the nature, amount, timing, and uncertainty of its revenue and cash flows. Net sales by principal product line are included below:



(In millions)	For the Three Months Ended March 31, 2018
Agriculture	$	2,343
Packaging and Specialty Plastics	419
Electronics and Imaging	527
Nutrition and Health	1,024
Industrial Biosciences	406
Transportation and Advanced Polymers	1,121
Safety and Construction	855
Other	4
Total	$	6,699

Sales are attributed to geographic areas based on customer location. Net sales by geographic region are included below:



(In millions)	For the Three Months Ended March 31, 2018
U.S. & Canada	$	2,515
EMEA¹	2,166
Asia Pacific	1,535
Latin America	483
Total	$	6,699


^1.	Europe, Middle East, and Africa (EMEA).