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Revenues from Contracts with Customers | 3 Months Ended
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Mar. 31, 2018
Revenue from Contract with Customer [Abstract] |
Revenues from Contracts with Customers | Revenues from Contracts with Customers: On January 1, 2018, Altria Group, Inc. adopted ASU No. 2014-09, which establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Altria Group, Inc. elected to apply the guidance using the modified retrospective transition method. The adoption of this guidance had no impact on the amount and timing of revenue recognized by Altria Group, Inc.’s businesses; therefore, no adjustments were recorded to Altria Group, Inc.’s condensed consolidated financial statements. Altria Group, Inc.’s businesses generate substantially all of their revenue from sales contracts with customers. While Altria Group, Inc.’s businesses enter into separate sales contracts with each customer for each product type, all sales contracts are similarly structured. These contracts create an obligation to transfer product to the customer. Contract durations do not exceed one year; therefore, there is no significant financing component, costs to obtain contracts are expensed as incurred and unsatisfied performance obligations are not disclosed. Altria Group, Inc.’s businesses define net revenues as revenues, which include excise taxes and shipping and handling charges billed to customers, net of cash discounts for prompt payment, sales returns (also referred to as returned goods) and sales incentives. Altria Group, Inc.’s businesses exclude from the transaction price, sales taxes and value-added taxes imposed at the time of sale (which do not include excise taxes on cigarettes, cigars, smokeless tobacco or wine). Altria Group, Inc.’s businesses recognize revenues from sales contracts with customers upon shipment of goods when control of such products is obtained by the customer. Altria Group, Inc.’s businesses determine that a customer obtains control of the product upon shipment when title of such product and risk of loss transfers to the customer. Altria Group, Inc.’s businesses account for shipping and handling costs as fulfillment costs and such amounts are classified as part of cost of sales in Altria Group, Inc.’s condensed consolidated statements of earnings. Altria Group, Inc.’s businesses record an allowance for returned goods, based principally on historical volume and return rates, which is included in other accrued liabilities on Altria Group, Inc.’s condensed consolidated balance sheets. Altria Group, Inc.’s businesses record sales incentives, which consist of consumer incentives and trade promotion activities, as a reduction to revenues (a portion of which is based on amounts estimated as being due to wholesalers, retailers and consumers at the end of a period) based principally on historical volume, utilization and redemption rates. Expected payments for sales incentives are included in accrued marketing liabilities on Altria’s Group, Inc.’s condensed consolidated balance sheets. Payment terms vary depending on product type. Altria Group, Inc.’s businesses consider payments received in advance of product shipment as deferred revenue, which is included in other accrued liabilities on Altria Group, Inc.’s condensed consolidated balance sheets until revenue is recognized. PM USA receives payment in advance of a customer obtaining control of the product. USSTC receives substantially all payments within one business day of the customer obtaining control of the product. Ste. Michelle receives substantially all payments from customers within 45 days of the customer obtaining control of the product. Amounts due from customers are included in receivables on Altria Group, Inc.’s condensed consolidated balance sheets. Altria Group, Inc.’s businesses promote their products with consumer incentives, trade promotions and consumer engagement programs. These consumer incentive and trade promotion activities, which include discounts, coupons, rebates, in-store display incentives and volume-based incentives, do not create a distinct deliverable and are, therefore, recorded as a reduction of revenues. Consumer engagement program payments are made to third parties. Altria Group, Inc.’s businesses expense these consumer engagement programs, which include event marketing, as incurred and such expenses are included in marketing, administration and research costs on Altria Group, Inc.’s condensed consolidated statements of earnings. For interim reporting purposes, Altria Group, Inc.’s businesses charge consumer engagement programs and certain consumer incentive expenses to operations as a percentage of sales, based on estimated sales and related expenses for the full year. Altria Group, Inc. disaggregates net revenues based on product type. For further discussion, see Note 7. Segment Reporting. Altria Group, Inc.’s businesses offer cash discounts to customers for prompt payment and calculate cash discounts as a percentage of the list price based on historical experience and agreed-upon payment terms. Altria Group, Inc.’s businesses record an allowance for cash discounts, which is included as a contra-asset against receivables on Altria Group, Inc.’s condensed consolidated balance sheets. There was no allowance for cash discounts at March 31, 2018 and December 31, 2017, and there were no differences between amounts recorded as an allowance for cash discounts and cash discounts subsequently given to customers. Altria Group, Inc.’s businesses that receive payments in advance of product shipment record such payments as deferred revenue. These payments are included in other accrued liabilities on Altria Group, Inc.’s condensed consolidated balance sheets until control of such products is obtained by the customer. Deferred revenue was $135 million and $267 million at March 31, 2018 and December 31, 2017, respectively. When cash is received in advance of product shipment, Altria Group, Inc.’s businesses satisfy their performance obligations within three days of receiving payment. At March 31, 2018 and December 31, 2017, there were no differences between amounts recorded as deferred revenue and amounts subsequently recognized as revenue. Receivables, which primarily reflect sales of wine produced and/or distributed by Ste. Michelle, were $133 million and $142 million at March 31, 2018 and December 31, 2017, respectively. At March 31, 2018 and December 31, 2017, there were no expected differences between amounts recorded and subsequently received, and Altria Group, Inc.’s businesses did not record an allowance for doubtful accounts against these receivables. Altria Group, Inc.’s businesses record an allowance for returned goods, which is included in other accrued liabilities on Altria Group, Inc.’s condensed consolidated balance sheets. While all of Altria Group, Inc.’s tobacco operating companies sell tobacco products with dates relative to freshness as printed on product packaging, due to the limited shelf life of USSTC’s smokeless tobacco products, it is USSTC’s policy to accept authorized sales returns from its customers for products that have passed such dates. Altria Group, Inc.’s businesses record estimated sales returns, which are based principally on historical volume and return rates, as a reduction to revenues. Actual sales returns will differ from estimated sales returns to the extent actual results differ from estimated assumptions. Altria Group, Inc.’s businesses reflect differences between actual and estimated sales returns in the period in which the actual amounts become known. These differences, if any, have not had a significant impact on Altria Group, Inc.’s condensed consolidated financial statements. All returned goods are destroyed upon return and not included in inventory. Consequently, Altria Group, Inc.’s businesses do not record an asset for their right to recover goods from customers upon return. Sales incentives include variable payments related to goods sold by Altria Group, Inc.’s businesses. Altria Group, Inc.’s businesses include estimates of variable consideration as a reduction to revenues upon shipment of goods to customers. The sales incentives that require significant estimates and judgments are as follows: Price promotion payments- Altria Group, Inc.’s businesses make price promotion payments, substantially all of which are made to their retail partners to incent the promotion of certain product offerings in select geographic areas. Wholesale and retail participation payments- Altria Group, Inc.’s businesses make payments to their wholesale and retail partners to incent merchandising and sharing of sales data in accordance with each business’s trade agreements. These estimates primarily include estimated wholesale to retail sales volume and historical acceptance rates. Actual payments will differ from estimated payments to the extent actual results differ from estimated assumptions. Differences between actual and estimated payments are reflected in the period such information becomes available. These differences, if any, have not had a significant impact on Altria Group, Inc.’s condensed consolidated financial statements.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
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