Annual report pursuant to Section 13 and 15(d)

Summary of Significant Accounting Policies (Tables)

v3.10.0.1
Summary of Significant Accounting Policies (Tables)
 12 Months Ended
Dec. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block]
The cumulative effect of the changes to accumulated deficit due to the adoption of ASC 606 and ASU No. 2016-16 were as follows:
(in millions)
Balance at December 31, 2017
Adjustments Due to ASC 606
Adjustments Due to ASU 2016-16
Balance at January 1, 2018
Assets:
 
 
 
 
Inventories
$
1,204

(22
)
—

1,182

Prepaid expenses and other current assets
71

—

(1
)
70

 
 
 
 
 
Liabilities:
 
 
 
 
Accrued liabilities
1,057

(36
)
—

1,021

 
 
 
 
 
Equity:
 
 
 
 
Accumulated deficit
$
(2,797
)
14

(1
)
(2,784
)
In accordance with the new revenue standard requirements, the impact of adoption on our condensed consolidated statements of operations was as follows:
Statements of Operations
Year ended December 31, 2018
 
(in millions)
As Reported
Balances Without Adoption of ASC 606
Effect of Change Increase/(Decrease)
Net revenue
$
11,282

11,143

139

 
 
 
 
Costs and expenses:
 
 
 
Cost of goods sold (exclusive of depreciation and amortization)
7,248

7,238

10

Operating
881

879

2

Selling, general and administrative, including transaction related costs and stock-based compensation
1,200

1,082

118

 
 
 
 
Income tax expense
334

332

2

 
 
 
 
Net income
$
928

921

7

Summary of activity in allowance for sales returns
A summary of activity in the allowance for sales returns, recorded on a gross basis for the year ended December 31, 2018 and recorded on a net margin basis for the years ending December 31, 2017 and 2016, was as follows:
(in millions)
Balance
beginning
of year

Additions-
charged
to earnings

Deductions

Transfer of HSN reserve

Balance
end of
year

2018
$
243

2,213

(2,214
)
—

242

2017
93

982

(979
)
23

119

2016
103

1,010

(1,020
)
—

93