Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2015

Valuation and Qualifying Accounts [Abstract]

Schedule II - Valuation and Qualifying Accounts

Accounts and Notes Receivable and Allowance for Credit Losses

Accounts and notes receivable are recorded at cost. The portion of our notes receivable due in one year or less are included in accounts and notes receivable and the long-term portion is included in other assets, net on the consolidated balance sheets. Lease receivables arise from sales-type leases of products. We typically sell, without recourse, the contractual right to the lease payment stream and assets under lease to third parties. For certain customers, we retain the lease.

The contractual amounts due under the leases we retained as of December 31, 2015 were as follows (table in millions):



Year	Contractual Amounts Due Under Leases
Due within one year	$	69
Due within two years	46
Due within three years	35
Thereafter	4
Total	154
Less amounts representing interest	(7		)
Present value	147
Current portion (included in accounts and notes receivable)	64
Long-term portion (included in other assets, net)	$	83

Subsequent to December 31, 2015, we sold $35 million of these notes to third parties without recourse.

We maintain an allowance for credit losses on our accounts and notes receivable. The allowance is based on the credit worthiness of our customers, including an assessment of the customer’s financial position, operating performance and their ability to meet their contractual obligation. We assess the creditworthiness for our customers each quarter. In addition, we consider our historical experience, the age of the receivable and current market and economic conditions. Uncollectible amounts are charged against the allowance account.

In the event we determine that a lease may not be paid, we include in our allowance an amount for the outstanding balance related to the lease receivable. As of December 31, 2015, amounts from lease receivables past due for more than 90 days were not significant.

During the years ended December 31, 2015 and 2014, there were no material changes to our allowance for credit losses related to lease receivables. Gross lease receivables totaled $154 million and $233 million in 2015 and 2014, respectively, before the allowance. The components of these balances were individually evaluated for impairment and included in our allowance determination as necessary.

EMC CORPORATION AND SUBSIDIARIES

SCHEDULE II–VALUATION AND QUALIFYING ACCOUNTS

(in millions)



Allowance for Bad Debts	Balance at Beginning of Period		Allowance for Bad Debts Charged to Selling, General and Administrative Expenses			Bad Debts Write-Offs			Balance at End of Period
Description	Balance at Beginning of Period					Bad Debts Write-Offs			Balance at End of Period
Year ended December 31, 2015 allowance for doubtful accounts	$	74	$	33		$	(15	)	$	92
Year ended December 31, 2014 allowance for doubtful accounts	65		10			(1		)	74
Year ended December 31, 2013 allowance for doubtful accounts	72		(1		)	(6		)	65

Note: The allowance for doubtful accounts includes both current and non-current portions.



Allowance for Sales Returns	Balance at Beginning of Period		Allowance for Sales Returns Accounted for as a Reduction in Revenue		Sales Returns			Balance at End of Period
Description	Balance at Beginning of Period				Sales Returns			Balance at End of Period
Year ended December 31, 2015 allowance for sales returns	$	70	$	128	$	(104	)	$	94
Year ended December 31, 2014 allowance for sales returns	76		89		(95		)	70
Year ended December 31, 2013 allowance for sales returns	86		55		(65		)	76



Tax Valuation Allowance	Balance at Beginning of Period		Tax Valuation Allowance Charged to Income Tax Provision		Tax Valuation Allowance Credited to Income Tax Provision			Balance at End of Period
Description	Balance at Beginning of Period		Tax Valuation Allowance Charged to Income Tax Provision		Tax Valuation Allowance Credited to Income Tax Provision			Balance at End of Period
Year ended December 31, 2015 income tax valuation allowance	$	126	$	43	$	(25	)	$	144
Year ended December 31, 2014 income tax valuation allowance	211		1		(86		)	126
Year ended December 31, 2013 income tax valuation allowance	183		32		(4		)	211