Recently Adopted Accounting Standards

In October 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-16 – Intra-Entity Transfers Other Than Inventory ("ASU 2016-16"), which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. We adopted this ASU in the first quarter of 2019 under the modified retrospective method and, in connection therewith, made certain adjustments as noted in the table below.

In January 2016, the FASB issued ASU 2016-01 – Recognition and Measurement of Financial Assets and Financial Liabilities, which provides guidance for the recognition, measurement, presentation, and disclosure of financial assets and liabilities. We adopted this ASU in the first quarter of 2019 under the modified retrospective method, with prospective adoption for amendments related to equity securities without readily determinable fair values. The adoption of this ASU did not have a material impact on our financial statements.

In May 2014, the FASB issued ASU 2014-09 – Revenue from Contracts with Customers (as amended, "ASC 606"), which supersedes nearly all existing revenue recognition guidance under generally accepted accounting principles in the United States. The core principal of ASC 606 is that an entity should recognize revenue when it transfers control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. We adopted ASC 606 in the first quarter of 2019 under the modified retrospective method and, in connection therewith, made certain adjustments as noted in the table below. We applied ASC 606 to contracts with customers that had not yet been completed as of the adoption date.

The following table summarizes the effects of adopting ASU 2016-16 and ASC 606.




	Ending Balance as of August 30, 2018		ASU 2016-16			ASC 606			Opening Balance as of August 31, 2018
Receivables	$	5,478	$	—		$	114		$	5,592
Inventories	3,595		—			(5		)	3,590
Other current assets	164		(14		)	30			180
Deferred tax assets	1,022		56			(92		)	986
Other current liabilities	521		—			(4		)	517
Other noncurrent liabilities	581		—			1			582
Retained earnings	24,395		42			50			24,487

As a result of the adoption of ASC 606, the opening balances as of August 31, 2018 for receivables, other current assets, and other current liabilities increased due to the reclassification of allowances for rebates, pricing adjustments, and returns to conform to the new presentation requirements. In addition, the margin from previously deferred sales to distributors was reclassified from other current liabilities to retained earnings. The tax effects of the adoption of ASC 606 were recorded primarily as a reduction of net deferred tax assets, substantially as a result of recognizing income for accounting purposes earlier under ASC 606 than for tax purposes in various jurisdictions.

The effects of ASC 606 to our consolidated statement of operations and balance sheet were as follows:



	Quarter ended February 28, 2019									Six months ended February 28, 2019
	As Reported			Adjustments			Amounts Without the Effects of Adoption of ASC 606			As Reported			Adjustments			Amounts Without the Effects of Adoption of ASC 606
Revenue	$	5,835		$	(20	)	$	5,815		$	13,748		$	(115	)	$	13,633
Cost of goods sold	2,971			(28		)	2,943			6,269			(69		)	6,200
Interest expense	(27		)	1			(26		)	(60		)	3			(57		)
Income tax provision	(280		)	(8		)	(288		)	(757		)	(5		)	(762		)
Net income attributable to Micron	1,619			1			1,620			4,912			(48		)	4,864



As of February 28, 2019	As Reported		Adjustments			Amounts Without the Effects of Adoption of ASC 606
Receivables	$	4,416	$	(154	)	$	4,262
Other current assets	211		(39		)	172
Deferred tax assets	762		87			849
Accounts payable and accrued expenses	4,062		—			4,062
Other current liabilities	665		(7		)	658
Other noncurrent liabilities	993		(1		)	992
Retained earnings	29,364		(98		)	29,266